Last week, NICE Systems announced that it has agreed to sell its physical security business unit (PSBU) to venture capital firm Battery Ventures in a deal worth up to $100 million. The deal also marks NICE’s official transition out of the security industry as the company previously announced plans to sell its cyber and intelligence division to Elbit Systems back in May.
Although they have invested in several cybersecurity companies in the past, Jesse Feldman, general partner at Battery Ventures who led the deal with NICE, said this would be the firm’s first foray into the physical security arena. Given the industry’s growth trends and the position that NICE’s VMS, situation management and video analytics platforms enjoy within the market, Feldman said they felt the PSBU would be a great fit for their firm.
“We think the macro theme around physical security is a very strong one with lots of organic growth potential. We obviously think the market is a very healthy market and we saw that in the numbers as well,” said Feldman. “The second thing that really attracted us to the opportunity here, on top of the macro theme, was where the NICE PSBU historically has performed. From our perspective, they have technology products that are some of the leading products in the market, particularly on the VMS as well as the situation management side. They have historically been chosen for the larger, more complicated implementations which speaks to, in our view, their product being more robust and more flexible.”
Feldman said that from Battery’s perspective, they felt they could help the unit become a standalone business which they believe will help them be a more focused and flexible company moving forward. “We actually think there is an opportunity for the business to perform even better going forward as a standalone entity which is what we’re going to help setup,” he added.
Feldman said they will be announcing a new name for the business in the “near future,” however; the product names will probably remain the same, at least in the short-term, as Battery retained the rights to those respective brands – NiceVision, NICE Situator, etc. – as part of the deal. But those too will likely change as the company and its products evolve, according to Feldman.
“I think NICE is an excellent brand name, although I would say that they are not particularly focused in the same markets where PSBU historically has been focused," he said. “In speaking with many of the customers, we got the sense that there wasn’t much interaction with the other parts of NICE. It is really all about people and the relationships that our people have with their customers and their partners and our ability to provide service to them.”
All of the business’ current personnel and senior leadership will become a part of the new independent company, according to Feldman. Moti Shabtai, the current general manager of PSBU at NICE Systems, will become group president of the newly created company. He will be joined by Adam Markin, an experienced industry operator and Battery executive-in-residence, who will serve as chairman. The newly created company will be headquartered in New Jersey with additional offices in London and Singapore, and an R&D center in Israel.
Being a relatively large investment firm, Feldman said there is no shortage of resources at Battery for the business to leverage to help it grow both organically and through acquisitions.
“Being part of a large company (such as NICE), there certainly are different priorities based on the business and, as I said, I think we will be able to be very focused and very flexible when it comes to dealing with our partners and our customers going forward. The only priority we have is whatever is best for our customer. There is no confusing that message,” said Feldman. “Battery’s intent is to continue to invest in the business, so that means we expect to continue to invest in product development, growing the team and perhaps even in acquisitions where we think there may be some interesting complementary technology products.”
