Kailash Ambwani, CEO of Actiance
Kailash Ambwani, CEO of Actiance, explained that following the release of Actiance’s cloud-based archive system Alcatraz, the company was approached by enough large financial sector clients that management needed to reconsider its structure for a larger client base.
“We felt we needed more financial flexibility to pursue the opportunity,” Ambwani noted. After meeting with a number of potential equity investors, the company settled on K1 Investments.
Stephen Marsh, CEO of Smarsh, explained that Actiance and Smarsh have run roughly parallel operations in the market for quite some time. “We’ve had very complementary business operating in a similar market, selling our services to similar customers for 15 years or so,” he said, noting that this hasn’t always been quite the case. The two companies started at roughly opposite ends of the market, with Actiance focusing most of its early efforts on large, multinational organizations, while Smarsh got its start serving smaller enterprises.
At this point, Marsh sees the two companies serving the same target base of large financial and government clients. “I think our vision is shared. I think those are going to be a big source of growth,” he said.
Stephen Marsh, CEO of Smarsh
Ambwani noted that although Smarsh and Actiance have served a similar market for quite some time, the two companies have relied on mostly complementary, rather than competing, technologies. Smarsh’s recent investments in mobile-based records retention, like the company’s acquisition of audio data storage group Cognia, pair well with Actiance’s focus on less well-established but increasingly popular social media communications channels like WeChat and WhatsApp.
“There’s actually surprisingly little overlap between the two product lines. Even where we do have common customers, the customers will typically be using different products from each of our portfolios,” he said.
Although the two companies are still deciding on their plan for a more unified operation, Ambwani said both Smarsh and Actiance are focused on hitting their pre-established growth goals for the year and ensuring that customers don’t notice the change.
“The key point is that from our customers’ perspective, they will not see a change. In the intermediary, we’ll continue to operate as two companies. It’s very important to not disrupt that growth,” he said.
Marsh noted that this may be the “most significant” merger deal in the archiving and records retention space, but that the market is no stranger to M&As. That said, startups in the space offering coverage for just a few different communication channels are likely to see an increasingly uphill battle for longevity in the market. “It’ll be really difficult to survive as a single point archiving solution provider no matter what the use case is,” he said.
“Organizations want all their communications in one place. There’s far less benefit in having fragmented archiving solutions, especially when more and more offices are hoping from one communications tool to another,” Marsh added.
