Digital investigation software startup Magnet Forensics has acquired United States-based video and multimedia evidence solution company DME Forensics in a deal worth $9 million.
The purchase marks Magnet Forensics’ first since it went public on the Toronto Stock Exchange (TSX) in April and third acquisition overall.
Magnet Forensics is acquiring DME under its United States affiliate. The deal consists of up-front cash consideration of $6.75 million, plus a $2.25 million earn-out over two years based on the achievement of certain integration-focused targets. DME’s employees and management team are set to stay on and become part of Magnet Forensics.
DME is a startup itself, having been founded in 2012 by Jimmy Schroering, a former forensic examiner for the United States Federal Bureau of Investigation’s Forensic Audio, Video and Image Analysis Unit.
DME develops video and multimedia evidence solutions, including one that allows investigators to recover video and metadata evidence from digital video recorder systems (DVRs) in a “forensically sound manner.” The technology is used by more than 900 public safety organizations in over 80 countries. Usages of the software span investigations of terrorism, civil unrest, homicide, property crimes, child exploitation, and other crimes.
The technology compliments Magnet Forensics’ quite well, as the company’s software acquires, analyzes, and shares evidence from computers, smartphones, tablets and IoT-related devices. Kitchener-Waterloo-based Magnet Forensics said the acquisition allows it to integrate DME’s tech capabilities into its own digital investigation solutions. The startup also plans to continue to sell DME’s DVR product through its own sales and distribution channels.
“Consolidating video evidence with other data types is an important component of Magnet Forensics’ vision,” said Adam Belsher, CEO of Magnet Forensics. “We are building a comprehensive digital investigation platform, powered by analytics, to help our customers identify and report on critical evidence in a timely and precise fashion. The video forensics capabilities of DME further strengthen and broaden our platform in this growth segment of digital investigations.”
Founded in 2010, Magnet Forensics is a team that includes a number of former BlackBerry employees, including Belsher who served as vice president of Verizon Business at the company. Former BlackBerry chairman and CEO Jim Balsillie chairs Magnet Forensics’ board of directors and was the company’s first investor.
The decade-old company has had some notable success to date, with its initial public offering pulling in $115 million. Magnet Forensics has seen its stock price rise since it hit the market at $22.50 per share, reaching a high of $64.90 at the end of August. Following news of the deal, Magnet Forensics’ stock price sits at $51.12 at time of publication.
In its latest quarterly report, the company reported revenues of $20.6 million CAD, an increase of 42 percent over the previous quarter. At the time, Belsher attributed the growth to Magnet Forensics continuing to win new customers and grow its existing accounts. “This performance grew our ARR to nearly $50 million,” the CEO said. “Our pipeline of new opportunities is robust and the new offerings we have launched are gaining traction in the market.”
In early August, Magnet announced a collaboration with London’s Metropolitan Police and Microsoft Azure on transforming how police agencies investigate crimes with relevant digital evidence from smartphones and computers with its software. Magnet Forensics claims its products are used by more than 4,000 public and private sector customers in over 90 countries.
