The Ellicott City-based firm played a key — if behind the scenes — role in bringing the deal to fruition. Greg Hogan, a director at SC&H Capital, said the firm helped advise Datablink’s board and shareholders as it went about the acquisition. Companies seek out such firms when they are preparing for a deal. In SC&H Capital’s case, the firm looks to work with middle-market companies.
“What we do for them is basically prepare them for that process and run a marketing process to help identify and negotiate for potential buyers,” Hogan said. From a money perspective, maximizing valuations is an important part of the work, he said. The process typically takes 6-9 months.
Ultimately, Hogan helped Datablink find a company that needed what it offered.
Datablink, which has a large portion of its team in Brazil, makes technology focused on authentication for banks. In other words, it makes sure that the person making the transaction is actually the authorized user. Watchguard, which has an enterprise security platform, was looking to bring in that authentication capability. As a result of the deal, Datablink will be integrated into Watchguard’s platform. Financial terms weren’t disclosed.
It’s the second such cybersecurity deal for SC&H Capital this year. In January, the firm represented Elkridge-based Intelsys Corporation in a deal to be acquired by Polaris Alpha. That deal brought together a pair of Maryland cybersecurity companies.
When advising on a deal, Hogan said he focuses on what makes the companies stand out.
“The biggest thing that we’re trying to decipher for own selves and communicate to buyers is around differentiation. What it is that our client has that other companies don’t?” he said.
In Datablink’s case, he pointed to the authentication technology itself. It’s different than others on the market.
“Datablink’s solution had really solved a lot of those common hacking issues, and therefore was more foolproof from a fraud prevention perspective,” Hogan said.
The deal was also indicative of a trend in the cybersecurity market: larger platform companies looking to integrate focused tools offered by companies. In the current market, companies are opting to buy a more holistic solution than individual pieces of security technology for each potential issue, Hogan said.