Yesterday, Ping Identity announced it has acquired Austin, Texas-based UnboundID. Although the financial terms were not disclosed, Forrester estimates the purchase price in the $50M-$75M range, based on typical M&A SaaS revenue multiples of 6X to 8X and Forrester’s estimation of UnboundID’s annual revenue.

This acquisition is not particularly surprising, as UnboundID and Ping have had a healthy reseller relationship since April 2015, so the purchase merely consummates the existing relationship. It also demonstrates how reselling relationships can help software vendors validate how they complement each other and set the stage for a complete acquisition.

For me, there are three key takeaways from the Ping Identity/UnboundID merger:

1.       Customer identity and access management (CIAM) demand is strong and growing. UnboundID’s focus on customer IAM complements Ping’s existing strengths in enterprise IAM and provides further evidence of the strong demand from today’s digital businesses to build compelling, identity-centric digital customer experiences. Forrester has seen a steady increase in the number of CIAM-related inquiries from enterprise clients looking to provide a holistic, omnichannel customer experience that doesn’t compromise on security or privacy. The Ping/UnboundID combination is now positioned to meet that growing demand.

2.       There is increased need for a scalable identity backbone. UnboundID’s founders have utilized their past experiences with the Sun Microsystems Directory Server to build a scalable identity backbone for CIAM. As CIAM demand increases, so will performance requirements, as poor website response times will only increase customer attrition. This acquisition helps prove the continued need for scalable IAM and will complement Ping well by giving it an identity backbone to meet existing high-scale enterprise IAM use cases and even emerging IoT scenarios for which scale is a high priority.

3.       Private equity is becoming a strong catalyst for change in the IT security vendor landscape. As I noted in my report, Brief: Five Questions To Ask After Private Equity Acquires Your Information Security Vendor, private equity is usually a catalyst for a wide range of changes, including more acquisitions and new senior management. While the UnboundID deal was likely several months in the making, it is interesting to note that this deal closed within a few months of private equity firm Vista Partners acquiring Ping Identity. Similar scenarios have played out with private equity firms in the enterprise security software space, and I expect that trend to continue.