mergers and acquisitions

Especially in a world with increased remote working, data governance risks for corporations and law firms aren't only centered on review and production of communications. Cybersecurity is increasingly taking a centered role, and communication archiving and monitoring company Smarsh is responding in kind.

Today, Smarsh announced it has acquired cybersecurity-focused tech company Entreda, whose software includes the Unify cyber risk platform, as well as systems and training. Through the acquisition, Entrada will function as a standalone subsidiary of Smarsh, maintaining its branding and the leadership of co-founder and CEO Sid Yenamandra.

Financial details for the transaction were not publicly announced. The deal from Smarsh's side was led by Brian Cramer, who became CEO of Smarsh in June 2018 following its merger with Actiance.

Both Smarsh and Entreda focus its efforts on the financial industry—Smarsh counts top banks in the U.S., Europe, Canada and Asia as its clients, while Entreda's solutions have historically focused on the wealth management community. This shared audience, as well as the ability to scale, was a major driver behind the deal, Smarsh's Cramer told LTN via email.

"In the past couple of years, more and more wealth management companies that we work with to address electronic communications compliance requirements have asked for help in addressing cybersecurity compliance requirements," he explained. "User concerns have only grown due to the increased threat of cybersecurity attacks and data breaches."

While the deal itself was not a direct response to pandemic-led security concerns, he said the company's combined forces will certainly be focused on addressing the need that comes from increased usage of platforms like Microsoft Teams, Slack and Zoom moving forward.

Organizations, he explained, "need to manage the compliance obligations that come with these platforms, as well as the cybersecurity risks associated with the remote work models. That translates into increased demand for device, network and user-level cybersecurity and compliance solutions. We see this adoption as a long-term trend."

Cramer and Yenamandra told LTN that there would be no immediate changes expected for preexisting Entreda customers, since the cybersecurity company will still function as a standalone entity, though they did not note whether the same is true for Entreda's employees. Yenamandra added that he does expect Entreda to be able to roll out more innovations on an accelerated timeline "thanks to increased resources and investment from Smarsh, as well as the opportunity to complement their current cybersecurity protections from Entreda with industry-leading archiving and compliance tools from Smarsh."

And the hope is that combined, the two entities will be better able to tackle financial services security. Yenamandra noted that from what he's seen, two distinct cyber risks have been surging in wealth management and financial services: insufficiently protected work and personal devices, and insufficiently secured data held by vendors.

"Each of these situations underscores that wealth managers, insurance companies and banks are only as strong as their weakest link when it comes to cybersecurity—and cyber breaches that involve compromised confidential client data can result in millions of dollars in regulatory fines and penalties, as well as untold amounts in legal liability, thereby representing a potential existential threat to financial services firms," Yenamandra said.