Combination sharpens focus on compliance, business intelligence
An Oregon company that captures and archives company communications has signed a deal to buy Digital Reasoning, a Cool Springs-based peer has over the past six years attracted a notable list of big-name investors locally and globally.
Terms of Portland-based Smarsh’s deal for 20-year-old Digital Reasoning aren’t being disclosed. The transaction is expected to close in the next two months. In a statement, the company say their plan will combine Smarsh’s expertise in handling more than 3 billion messages per day and Digital Reasoning’s expertise in analytics powered by artificial intelligence and machine learning and focused on compliance matters. Smarsh specializes in working with financial institutions, an area Digital Reasoning expanded into this decade (along with health care) after starting life focused on national security and intelligence work.
“Smarsh and Digital Reasoning's combined capabilities equip customers with an entirely new expertise that we are calling ‘Communications Intelligence.’” Smarsh CEO Brian Cramer said. “Using artificial intelligence and machine learning helps firms more efficiently supervise and mitigate risk at scale, and will now enable them to analyze their electronic communications to uncover business intelligence that can fuel sales and other revenue drivers.”
Digital Reasoning has over the years secured tens of millions of dollars of investment capital, including from local players Nashville Capital Network and Tennessee Angel Fund (both in 2014) and HCA Healthcare (in 2015). As it expanded into finance and across the planet, it also drew funding from blue-chip names Barclays, BNP Paribas, Goldman Sachs, Nasdaq, Macquarie Group and Standard Chartered, among others. Early this year, a fund backed by private equity giant Apollo Global Management pumped another $20 million into the venture.
“In this new world of remote work, a company's digital communications infrastructure is now the most essential one for it to function and thrive,” said Tim Estes, founder and CEO of Digital Reasoning. “Smarsh and Digital Reasoning provide the only validated and complete solution for companies to understand what is being said in any digital channel and in any language. This enables them to quickly identify things like fraud, racism, discrimination, sexual harassment, and other misconduct that can create substantial compliance risk.”
Founded in 2001 and a mainstay on the Inc. 5000 list of fastest-growing private companies, Smarsh had 2018 revenues of $112 million and employs more than 600 employees. With backing by K-1 Investment Management, it has been a regular buyer of similarly-focused companies, including cybersecurity compliance solutions company Entreda earlier this year.