In his letter Grady explicitly says: 'My decision results from my increasing discomfort with the Company's de facto embrace of the status quo, and tolerance of management leadership's actions to resist value-creating transactions. I believe that the Board and management of AuthenTec should take decisive action to enhance shareholder value, but that view, supported in concept, is not reflected in actions. Enhancing shareholder value needs to be more than a talking point.'The events described in this article concern two fingerprint sensor manufacturers, but you can expect to see many more articles of this nature over the next few years.
The biometric identity management sector will see rapid consolidation for several reasons:
- The most coveted customers for biometric identity management solutions are very large organizations, while the suppliers of goods and services tend to be very small companies. The big companies know that the little companies don't have the depth to support them. This doesn't mean that deals don't get done. The small tech. firms can and do partner up with large scale IT integrators to meet the needs of large customers, but this model presents its own challenges.
- Investors in early- and development-stage tech start-ups would like to see the beginnings of a possible exit strategy. It's not that they all want out; it's just that all investors are investors because they would like to earn a return. Without shareholder liquidity, an exit from an investment and the actualization of the commensurate gain or loss is difficult.
- The current investment and economic environment means that firms in the sector will fail and their assets will accrue to the remaining firms.
- The firms, themselves, and their boards will see growth opportunities and increased liquidity and heightened ability to support their customers without outside assistance as they grow larger through acquisition.
