The $76 million purchase of MK Data bolsters Descartes customer base and screening content, while also giving further visibility into what value the market places on compliance-related software companies.
The logistics and global trade solutions provider Descartes Systems Group has acquired the denied party screening data and solutions provider MK Data Services LLC for $76.3 million.
Columbia, Md.-based MK Data is considered a leading provider in the denied party screening solutions market, a niche the company has focused on while other compliance-oriented software companies have expanded into other strategic areas of trade compliance, transportation and logistics. The company has more than 900 customers, and is an existing partner of Descartes, with a connection to Descartes Global Logistics Network.
Governments of various countries, as well as international organizations, maintain a variety of lists of people, organizations and countries with which it is restricted or prohibited from doing business, including customers, suppliers, employees and business partners.
“Often, the burden of compliance with these business restrictions is placed on those involved in the logistics of a shipment, such as the exporting business, the logistics intermediary/freight forwarder or the transportation carrier,” Descartes said in a statement. “Penalties for non-compliance have included civil fines, revocation of export privileges and criminal charges. In addition, since penalties are published publicly, non-compliance with these trade restrictions can bring with it tremendous reputational damage.”
Descartes said MK Data’s screening technology has already been incorporated into its broader global trade management solutions, and can be integrated into its customer relationship management and enterprise resource planning systems to bolster compliance across departments. The use of MK Data’s content within Descartes’ solutions should function much like the trade data content it obtained in its acquisition of Customs Info in 2014.
“The Global Logistics Network is the logical place for multi-national shippers, logistics intermediaries and transportation carriers to screen for compliance with international trade restrictions,” said Descartes Chief Executive Officer Ed Ryan. “Our combination with MK Data is truly a unifying acquisition for our business, as trade compliance is both an individual and shared interest of every single participant on the GLN.”
Descartes will pay $76.3 million in cash plus the assumption of roughly $7.2 million of contingent and other cash payment liabilities.
The purchase price for MK Data, in many ways, further defines the still nascent global trade management technology market. The company is a niche vendor and far from the more all-encompassing GTM providers like Amber Road, Integration Point, Descartes, Oracle, and SAP. Amber Road netted $54.1 million after expenses from an initial public offering in March, and all but Integration Point in the list above are publicly traded companies, though Oracle and SAP’s global trade management revenues account for only a small fraction of those companies’ overall revenues.
Descartes’ purchase of MK Data falls right in line with its acquisitive and partner-friendly strategy in recent years, as it seeks to drive the size and gravity of its GLN by layering new services, tools, and content for transportation and trade compliance practitioners.
Descartes acquires denied party screening software provider
