HW Government Technology Introduction

Harris Williams (“HW”)

  • 25+ years and more than 1,000 closed transactions
  • 350+ professionals across eight offices globally
  • 170+ closed transactions in the last 24 months
  • 10 industry groups

Focused Advisory Services

  • Mergers and acquisitions (M&A)
  • Capital raises
  • Corporate divestitures

Consistent Recognition for Quality

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HW Technology Group

  • 35+ dedicated Technology professionals
  • Technology offices include Boston, San Francisco, and London

Key Technology Themes

  • SaaS / Cloud
  • Data & Analytics
  • Digital Transformation
  • A.I. / Machine Learning

Horizontal Focus Sectors

  • Application Software
  • Cloud Managed Services and Hosting Solutions
  • Compliance Solutions
  • CRM and Marketing Automation
  • Human Capital Management
  • Infrastructure and Security Software
  • IT and Tech-Enabled Services
  • Marketing, Research, and Insights Software

Vertical Focus Sectors

  • Architecture, Engineering, and Construction Software
  • Education Technology and Services
  • Energy Technology
  • Facilities and Real Estate Software
  • Financial Technology and Payments
  • Government Technology
  • Healthcare IT
  • Industrial and Supply Chain Technology
  • Internet and eCommerce
  • Retail Technology

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Government Technology Taxonomy

Administration & Operations

Solutions focused on supporting core operational and administrative functions of government agencies

  • ERP
  • Financial Mgmt. 
  • Procurement
  • Operations
  • Content Mgmt. & Records
  • Licensing & Permits 
  • Taxation & Appraisal 

Select Market Participants

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Asset and Resource Management

Solutions focused on supporting public infrastructure planning, asset management, and environmental services

  • Environmental Svcs.
  • Parks & Recreation 
  • Smart Cities & Transportation
  • Utilities
  • Asset & Resource Mgmt. 
  • Public Works

Select Market Participants

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Civic Engagement & Public Services

Solutions focused on facilitating communication between government agencies and constituents

  • Communication
  • Citizen Engagement
  • Service Request Mgmt. 
  • Human Services
  • Voter Registration & Mgmt. 
  • Grant Mgmt. 

Select Market Participants

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Public Safety & Justice

Solutions focused on supporting public safety departments, courts and justice systems, and corrections

  • Law Enforcement
  • Justice & Corrections
  • Emergency Medical Response 
  • Fire Safety
  • Coursts Mgmt. 
  • Security & Intelligence

Select Market Participants

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Select Recent HW Govtech Transactions

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Select Case Studies

Citizen Engagement

Pending | Harris Williams Acted as Advisor to Harvest Partners

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Company Overview

Provider of cloud-based software solutions that enable federal, state, and local government entities to automate workflows, increase transparency, and more effectively connect with constituents.

Solution Overview

Leading digital government platform purpose-built for civic engagement and virtual communication, online service delivery, and operations.

 

Recreational Licensing & Training Software

April 24, 2020 | Harris Williams Acted as the Exclusive Advisor to Kalkomey

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Company Overview

Provider of online recreational safety education, certifications, and cloud-based agency management solutions for outdoor enthusiasts and government agencies.

Solution Overview

Fully-integrated product suite for agency management and provides differentiated, regulatory-approved content library addressing a broad spectrum of recreational activities.

 

Government Software & Payments

March 20, 2019 | Harris Williams Acted as the Exclusive Advisor to PayIt

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Company Overview

Provider of modern, mobile technology platform designed to simplify government operations and provide users with intuitive, contextual interactions.

Solution Overview

Best-in-class software solution with sleek design and differentiated chat-based user experience that enables government to provide digital services and collect payments.

 

Government Software & Payments

February 21, 2018Harris Williams Acted as the Exclusive Advisor to nCourt

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Company Overview

Provider of software and payment technology designed for state and local government agencies, most notably within courts and criminal justice and tax and treasury.

Solution Overview

Differentiated SaaS platform designed to simplify government operations and facilitate a variety of payments across multiple channels, including online and mobile.

Government Technology Market Overview

The govtech market is vast and represents significant opportunity for next-generation solutions.

U.S. Federal Government Technology Snapshot

Software and technology solutions that serve federal government agencies, including the Department of Defense, the Department of the Treasury, the Department of Justice, and the Department of Health and Human Services.

Revenue is primarily generated through individual income and payroll taxes, as well as corporate income taxes and various other sources.

Federal Government: By the Numbers

  • 450 Federal Government Agencies1
  • 2M+ Federal Civilian Government Employees2
  • 63.5% Medium & High Risk Federal IT Systems3

U.S. State and Local Government Technology Snapshot

Software and technology solutions that serve state and local government agencies, police and fire departments, emergency medical services, courts, transportation, public works, and parks and recreation.

Revenue is collected from a variety of sources, most notably property and sales taxes, as well as a variety of other fines and fees, licensing, and utilities.

State & Local Government: By the Numbers

  • 90K+ State and Local Government Entities1
  • 19M+ State and Local Government Employees2
  • 450K+ IT Systems Across State and Local Government4

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Long-Term Govtech Industry Tailwinds

Government entities are increasingly seeking cloud-based platforms that can be deployed across agencies to replace disparate legacy systems, eliminate organizational silos, and reduce costs.

Migration to the Cloud

  • Government continues to transition away from legacy on-premise technology systems to unified cloud-based platforms that can be leveraged across federal, state, and local agencies and configured—not customized—for government department workflows
  • Since the establishment of the Federal Risk and Authorization Management Program (FedRAMP), government cloud adoption has increased exponentially, yet less than 5% of government agencies operate entirely in the cloud and nearly 30% continue to operate completely on-premise6

Modernization of Operational Workflows

  • U.S. government agencies are forecasted to spend nearly $125B on software and IT services by 2023F—with an emphasis on adopting software that improves operational efficiency—as new legislation, consumer demand for digital services, and cost-saving initiatives accelerate modernization
  • Next-generation technologies like Robotic Process Automation (RPA) have tremendous potential to transform government operations; for example, RPA has been estimated to save 1.3 billion hours on manual tasks if deployed across all U.S. government agencies

Digitization of Government Services

  • The current macroeconomic environment highlights the need for government agencies to remotely deliver services to citizens and businesses that meet the standards and offer digital experiences on par with other industries
  • Digitization of government payments has become a strategic imperative and represents high-impact cost savings; for example, the IRS estimates that the cost of an online transaction can be as low as $0.20, compared to $42 for a payment processed over the phone and $57 by check

Consumerization of Government

  • As web-based and mobile technology has rapidly improved and pervaded nearly all industries, government is playing “catch-up” in order to reinforce trust, establish greater engagement, and improve satisfaction with the citizens and businesses it serves
  • Constituents not only expect but now require highly personal and contextual digital experiences across government, catalyzing demand for intelligent, cloud-based technology capable of delivering relevant and timely information and services

Utilization of Data and Analytics

  • Governments collect and have access to massive amounts of data, but existing legacy solutions are unable to quickly and accurately analyze information and glean real-time insight, hindering decision-making and magnifying operational inefficiencies
  • Predictive analytics and AI can dramatically improve government effectiveness by enabling agencies to be proactive—as opposed to reactive—to reduce crime, enforce food and safety regulation, monitor inspection compliance, and prepare for natural disasters, among other initiatives

Key Themes

  • Digital Citizen Identity
  • Data-Driven Decisions
  • Unified Engagement
  • Modern Architecture
  • Interoperability
  • Cybersecurity
  • Digital Workforce

Real-Time Trends in Govtech

Several dynamics are contributing to a rapidly evolving govtech landscape.

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State of Government Modernization

Politicians, IT leaders, and citizens are eager for government agencies to deliver modern digital solutions that improve government operations and digital service delivery.

Modernization Is Underway, But Significant Runway Lies Ahead…

Less than a quarter of all U.S. government technology systems have been modernized, leaving significant opportunity for adoption of cloud-based software

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... And Cloud Adoption Is Accelerating

  • COVID-19 has exposed government’s need to improve technology infrastructure to better serve employees, citizens, and businesses
  • The silver lining to the ongoing pandemic is the widespread recognition that investment in modern, cloud-based software solutions is paramount to adapting to an increasingly digital environment

"We’ve seen more innovation in the past two months than we’ve seen in the past two years in government… it’s not that [government agencies] weren’t moving, but sometimes you have to move faster for a reason. We’ve seen leadership stepping up and saying ‘we have to create the right systems’” — Teresa Carlson, VP of AWS Worldwide Public Sector

 

Top Priorities for State CIOs: 2020 vs. 20218

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Recent News and Insights

COVID-19: The Ultimate Stress Test for Major Government Systems

  • Source: govtech.com
  • Key Themes: IT Modernization
  • Link to Article: Here

Key Takeaways and Insights

  • Government technology was put to the ultimate test when the onset of COVID-19 drove astronomical spikes in digital citizen requests and unprecedented work-from-home requirements, hastening urgency for government IT modernization.
  • According to data collected by the Information Technology and Innovation Foundation, 26 state unemployment websites had crashed under the weight of an eleven-fold increase in unemployment insurance claims in the US by April 15, 2020 as stay-at-home orders put immense economic pressure on businesses across the country.
  • Organizations that had modern systems in place proved that leveraging cloud-based technology to administer public services (and—in in this case—scale infinitely) is critical to civic engagement, public safety, health and human services, and general operational initiatives.

Bit-by-Bit: How Governments Used Technology to Move the Mission Forward During COVID-19

  • Source: Partnership for Public Service
  • Key Themes: IT Modernization
  • Link to Article: Here

Key Takeaways and Insights

  • The stress placed on government technology in 2020 highlighted the antiquation of many government systems and shifted the narrative around modernization from a “nice-to-have” to an essential step in delivering services.
  • The Department of Veterans Affairs (VA) rapidly adopted to the challenge of COVID-19, rolling out a chatbot to respond to inquiries. The chatbot responded to twice as many coronavirus-related queries as did the traditional contact center during peak periods (53,000 unique sessions), and two-thirds of veterans were “Very Satisfied” or “Satisfied” with their experience.
  • Government agencies that were able to quickly adapt and implement new technologies not only validated the use case of next-generation solutions, but improved service delivery and paved the way for future adoption.

Fostering Contactless Government Beyond the Pandemic

  • Source: govtech.com
  • Key Themes: Digital Delivery
  • Link to Article: Here

Key Takeaways and Insights

  • The pandemic has been a driving force behind government digitization, forcing agencies to address IT initiatives that often get put on the backburner as daily government affairs take priority and distract organizations from maintaining momentum and instead getting caught in the trap of status-quo.
  • According to Los Angeles CIO Ted Ross, the pandemic has increased the city’s ongoing digitization efforts as much as three-fold and, according to Deloitte’s Center for Government Insights, accelerated technology roadmaps by as much as five years in areas such as telemedicine, marking a transformative period for the industry.
  • As the world eventually returns to normal, government agencies should prioritize digitization efforts that reduce friction and bring pre- and post-service workflows online, recognizing that not all services can be delivered virtually.

Market Observations

Govtech providers continue to consolidate the highly fragmented industry to establish platforms of scale.

Market Observations

  • Govtech continues to attract strong interest from financial sponsors and strategic acquirers eager to invest in next-generation software solutions capable of modernizing government operations, particularly as agencies seek to deliver services digitally and reduce costs in response to ongoing budget pressure
  • Consolidation of software vendors persists as companies and investors look to establish comprehensive offerings across a highly fragmented landscape of specialized solutions, many of which lack scale and operate regionally
  • Continued concentration of government IT decision making at the state and local level contributing to M&A market activity as govtech software providers seek to leveraging existing relationships to expand their footprint across agencies and government functions
  • Payments continues to be an attractive segment within govtech given the need for organizations to more efficiently collect revenue and the demand for consumer-grade citizen engagement solutions that improve and streamline government interactions

Most Active Govtech Consolidators

Since 2015, the six most active govtech consolidators have acquired over 70 companies

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Recent Market Activity

Private equity and strategic acquirers are accelerating their investment pace as they seek to create next-generation government software and payments platforms capable of serving diverse agencies.

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Select Govtech Transactions

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Harvest’s Investment in Granicus

  • Granicus provides cloud-based software solutions that enable federal, state, and local government entities to automate workflows, increase transparency, and strengthen civic engagement.
  • Granicus’ digital government platform is used by more than 4,500 public sector organizations that serve more than 250 million citizens and helps increase civic engagement by more than 500%.
  • Harvest will support Granicus’ continued growth as government agencies accelerate digital transformation initiatives and seek modern software solutions to more effectively and efficiently serve constituents across channels.
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Banneker’s Acquisition of Versaterm

  • Versaterm provides cloud-based public safety solutions including computer aided dispatch (CAD), records management systems (RMS), and mobile solutions for first responders.
  • Versaterm has over 40 years of experience building public safety solutions and is deployed across over 80 major police departments in N.A.
  • Banneker’s acquisition will enable Versaterm to invest in continued growth, in greater product innovation, and expanding its customer footprint.
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JMI’s Investment in Swiftly

  • Swiftly is a cloud-based public transit data and operations platform that enables operators to more efficiently and accurately plan and execute transit plans, leveraging real time passenger and transit data alongside historical insights.
  • Over 5,500 transit professionals spanning over 90 cities and transit systems use Swiftly to facilitate over 1.6 billion annual trips.
  • Swiftly intends to use the partnership with JMI to double headcount and expand its customer-facing teams in order to increase its customer base and enhance its ability to directly engage with its users.
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NEOGOV’s Acquisition of PowerDMS

  • PowerDMS provides cloud-based compliance software that helps customers across high-risk industries simplify how they create, track, and attest to policies, training, and industry standards.
  • Over 3,500 municipalities, law enforcement agencies, Fire/EMS departments, and healthcare organizations use PowerDMS’ systems to manage their critical processes, communications, and content.
  • The acquisition of PowerDMS complements NEOGOV’s human capital management platform and deepens their expertise in procedure and policy management, enabling greater integration and modernization of their core public sector clients’ systems.
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Polaris’ Acquisition of B2GNow

  • B2Gnow is a SaaS-based diversity program management platform that enables public sector organizations to automate, track, and enforce compliance across government supplier contracts.
  • B2Gnow has engaged with over 235 clients to process more than two million certification records and oversees more than $1 trillion in procured contract value across its platform.
  • Polaris’ acquisition of B2Gnow will help the company continue to expand its customer base, strengthen its sales and go-to-market efforts, and invest in continued product differentiation.

Govtech Landscape Overview

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Relative Public Equity Performance9

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Comparable Public Company Operating Metrics9

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Comparable Public Company Valuation Metrics9

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Notable Recent Transactions9,10

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Case Study: Kalkomey

HW’s Technology Group advised Kalkomey, a portfolio company of Inverness Graham, on its sale to Cove Hill Partners.

screen_shot_2021-01-29_at_11.59.54_am.pngTransaction Overview

Kalkomey is a leading provider of online recreational safety education reaching all 50 U.S. states, as well as Australia, Canada, Guam, Mexico, New Zealand, Puerto Rico, and the U.K. The Company works hand in hand with governmental agencies to provide tailored online safety education courses and certifications for boating, scuba diving, hunting, snowmobiling, and off-roading.

Kalkomey’s regulatory-approved safety education courses provide official safety certifications to nearly a million students annually. The Company’s cloud-based government agency software offerings drive operational efficiencies of key workflows from licensing and registration, to certification and event management, to compliance and reporting.

Cove Hill is a long-term-oriented private equity firm focused on partnering with management teams to build market-leading technology and consumer companies. The firm manages a long-duration fund with over $1 billion of commitments from its investors and founders. Based in Boston, Cove Hill has an innovative structure that provides the flexibility to enable a patient, concentrated, and value-added approach in a small portfolio of long-term investments.

Relevant Sub-Sectors

  • Government Technology
  • Vertical Software
  • Education Technology

Case Study: PayIt

HW’s Technology Group advised PayIt on its strategic investment from Insight Partners.

screen_shot_2021-01-29_at_12.01.28_pm.pngTransaction Overview

PayIt is a leading provider of next-generation integrated digital government software and payment solutions. The Company improves citizen-government interactions by providing a modern, mobile technology platform designed to provide users with an intuitive, contextual experience.

PayIt’s best-in-class software and payment solutions feature a sleek design and are differentiated by a chat-based user experience. The Company’s solutions seamlessly integrate into existing government technology infrastructure, connecting disparate systems to deliver a single, unified platform suited for diverse government workflows. PayIt serves a variety of government organizations, including departments of motor vehicles, transportation agencies, parks and wildlife agencies, public utilities, and tax departments, among others, and has experienced rapid customer growth and user adoption that demonstrates the value proposition to both the government and the public. In addition to continued penetration of existing government segments, PayIt has an attractive opportunity to augment growth through expansion into new government adjacencies.

Insight Partners is a leading global private equity and venture capital firm that focuses on growth and buyout transactions across a broad range of software and technology segments.

Relevant Sub-Sectors

  • Government Technology
  • Vertical Software
  • Payments

Case Study: nCourt

HW’s Technology Group advised nCourt, a portfolio company of Mainsail Partners, on its sale to Providence Strategic Growth and Greater Sum Ventures.

screen_shot_2021-01-29_at_12.04.08_pm.pngTransaction Overview

nCourt connects government entities and the public through an integrated SaaS civic engagement and payments platform. The Company’s solutions government operations and revenue collection by streamlining payments and reporting through intuitive web and mobile applications.

nCourt provides software and payment technology to state and local government agencies, most notably within courts and criminal justice and tax and treasury. The Company boasts a large, established customer base with compelling unit economics and strong organic growth driven by digital adoption as payments move online and governments seek to upgrade legacy systems. nCourt has experienced an impressive growth trajectory, highlighted by several key customer wins in attractive adjacent markets that expand the Company’s addressable market. In addition to continued organic growth, nCourt is well positioned to pursue strategic acquisitions and consolidate a fragmented industry characterized by sub-scale, and often regional, point solutions.

Providence Strategic Growth, a leading private equity firm focused on minority and control investment across software, and Greater Sum Ventures, a growth-oriented technology investor, partnered to form Government Brands with nCourt as the platform asset.

Relevant Sub-Sectors

  • Government Technology
  • Vertical Software
  • Payments

HW Insights | Government Technology: The Sleeping Giant Stirs

HW’s Technology team shares its views on the increasingly active govtech sector in a recent article, highlighting the attractiveness of the integrated software and payments opportunities in the segment.

Sector Observations

Government agencies are under increasing pressure to modernize their IT systems, especially those serving today’s digital consumers. That’s opening up a $100B+ opportunity for technology vendors, and for the strategic buyers and financial investors that understand the space.

In this article, Managing Director Tyler Dewing, Director Scott Reinig, and Vice President Mike Quealy of the Harris Williams Technology Group explain the key drivers of this shift and reveal one specific area creating noteworthy growth opportunities.

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Article Excerpt

“Modernizing payments is a quick win for both government agencies and technology vendors,” says Dewing. “For agencies, it delivers an almost instant and significant operational efficiency boost for employees and service improvement for the general public—without requiring a big-budget purchase. For vendors, it creates an attractive revenue model and enables those with a broad suite of solutions to get a foot in the door.”

Notable HW Government Software & Payments Transactions

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M&A Advisor of Choice for Leading Technology Companies

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1. Census of Governments

2. US Bureau of Labor Statistics

3. United States Government, Office of Management and Budget

4. Tyler Technologies

5. Gartner

6. Government Business Council

7. Center for Digital Government

8. National Association of State CIOs

9. CapIQ

10. Pitchbook