Verra Mobility completed its $113m acquisition of Redflex Holdings, making the latter a wholly-owned subsidiary. The deal will give the Redflex business new capital and resources – albeit at the expense of its name and brand identity, which will be absorbed into Verra over time – and position Verra to grow in the broader ITS market.
Former Redflex CEO Mark Talbot has joined Verra’s leadership team as executive vice president to head the company’s government solutions business - the largest group at Verra and responsible for everything traffic-related. Reporting direct to CEO David Roberts, he is tasked with pursuing, developing and expanding ITS opportunities with government customers.
In a call with ITS International, Talbot says of the two companies: “We pursue the same market: we have the same mission, which is automated enforcement, it’s making roads safer, reducing congestion and reducing overall emissions from vehicles.”
Importance of intellectual capital
Redflex has “a history of creating their own intellectual capital, and investing in that product”, with a global reach. For Verra, therefore, Talbot sees the following gains: “Direct access to Europe, direct access and a presence in Asia-Pacific, direct access in Canada - a little bit more than what they have today. So, in essence, it gives them a global footprint with established contracts and relationships and a go-to-market approach. And I think what we’ll continue to do is to pour resources and talent into those channels to continue to expand.”
Talbot’s new role includes the combined legacy entities of both Verra Mobility’s government automated enforcement business and Redflex. “So basically, you’ve established a global entity that is going to go after those markets as well as continue to broaden our ITS exposure,” he explains. “We were already doing that as Redflex, and Verra has the same intent - so this is just ramping up our bridge to that approach.”
His first role will be to ‘harmonise’ the leadership team; the second “is to really pick up and establish the mission of how we’re going to go to market and continue to pursue the efforts of both companies, both domestically in the US, as well as their international footprint”.
He will aim to enhance the new entity’s capabilities so that, in fiscal year 2022, Verra “hits the ground running as a harmonised entity, pursuing a broader expansion of ITS and our footprint in those established markets”.
What is Verra Mobility's strategy?
While Covid-19 has restricted overseas trips, Talbot can travel in the US, which is also where his new Verra Mobility team is based. “We’re able to have quite a bit of interaction, although I think customers are still reluctant to meet directly,” he says. “We’re very fortunate that we have significant leadership talent in each of our geographies and, as a result, we’re really able to continue business as usual. If you’re a global company, you can’t be everywhere, so you need strong leadership, and I think that existed. That will continue until we can get on a plane and go see customers again but I’m pretty comfortable that we have a team in place that can execute on our strategy.”
Mature, established markets in Europe, Australia, New Zealand, Canada and the US will be the focus, as territories which have “an emphasis on using technology to manage their motorways and manage their delivery of service”.
Redflex tended to do more product development than Verra did, so how will this aspect of the combined company’s business work going forward? “We’re both coming in with open minds,” says Talbot. “So I think it’s a combination of sitting down and having thoughtful conversations between both engineering teams. We at Redflex probably did a little bit more development, solely because of how we went to market, where we were selling hardware or selling product; whereas Verra probably spent quite a bit of time on their back office and their services platform, as opposed to the edge technology. But the reality is it’s a bigger company, there are more dollars to spend in aggregate, and it’s incumbent on part of my approach over the next 90 days to determine how we focus our dollars and get the biggest bang for our buck. It’s a great problem to have.”
Talbot says that the acquisition has created a solid platform for moving forward. “If you’re asked to go manage a business and you’re given one of either: financial resources, talent or an established footprint and access to a market, you’d be probably really successful with two out of three. And we have all three. So for me, it’s a matter of execution at this point, as opposed to a lack of resources, a lack of access or a lack of desire: we’re the complete opposite - we have all three opportunities and needs to move forward. We’re very fortunate with what Verra has put together.”
What will happen to the Redflex name?
While the Redflex name will eventually disappear, Talbot is well aware of its brand equity. “We’re going to be pretty thoughtful about that over the next 90 to 180 days,” he begins. “Clearly where there’s a presence of both Verra and Redflex, it makes sense that Verra continues to promote, and we are in essence going to market as one Verra Mobility. In places where Verra doesn’t have a presence, I think there is a gradual introduction, and ultimately yes, it’s going to be Verra Mobility: we are going to be an ITS company, and known as an ITS technology provider and service provider.”
That said, he knows that Redflex will continue to have currency in certain geographies. “But ultimately, Verra Mobility is the brand that we want people to know, understand and appreciate - and any of the goodwill that exists with Redflex today needs to be transitioned into that.”
This will need careful handling, “particularly in the international market where you have a 20-year history of selling”.
The merger will bring workforce casualties as some roles and functions will inevitably be duplicated. “Verra has been pretty public about the fact they expect to have savings where there are redundancies,” says Talbot candidly. “And I think we’ll go through the process and make sure that we have the most efficient platform to deliver services. So yes, I think that’s a very logical conclusion. But I will say both have pretty established operations. These are, let’s say, reductions or efficiency gains that make sense – they aren’t efficiency gains that we are pressed to do immediately. We’re going to be prudent about it.”
He is confident that customers will be reassured. “I think there are customers that have been around a long time and know that there’s consolidations in any industry, so I don’t think it is alarming to them that one of their vendors - or multiple vendors - are consolidating into a single entity,” Talbot suggests.
“That is certainly par for the course. It really is more about ‘how am I getting my service delivered? who’s delivering it? who’s my contact? can I expect the same level of quality service? will there be a disruption?’ All those are things we’re very conscious of and - as we go through the harmonisation of the two companies into one - we’re making sure we’re taking care of the customer along the way.”
Who are Verra Mobility's customers?
Verra will be targeting city and local agencies, transit authorities and departments of transportation.
“Anybody who’s responsible for road operations, public safety and, as we move into the urban environment, mobility in general - those will be our target agencies,” he adds. “It’s a matter of being a trusted vendor and technology provider, for us to then expand and radiate into other aspects of the agency’s overall mission. But again, in broad scope, we want to make the road safer, we want to reduce congestion, increase the flow of traffic – and, as a byproduct, reduce harmful emissions.”
Verra’s value proposition has two aspects, Talbot suggests. The first is a workflow platform “which is enabling violations [monitoring], enabling payment processing and enabling customer care around the activities that we generate from the edge”.
Data analytics is also a component, software that can be sold as a service. “So that’s one aspect that we’ll continue to invest on and look for avenues to expand,” he says. “And then there’s the edge system which is the sensor. Again, we spend quite a bit of money in research and development on improving that sensor, so that the data we’re gathering has broad utility. So we’ll continue to look at them as two separate investments, but at the same time we deliver an end-to-end service - also for specific things such as red-light running or speed enforcement or distracted driving: anything that we see as a compliance issue that the government wants to focus on that will drive greater safety. We want to be both the edge sensor as well as the workflow system on the back end to administrate or adjudicate that process.”
