A decade ago, Palm Beach resident Ted Johnson founded Cross Match Technologies Inc. and began grooming it for the day when taking it public made sense.

The transition toward an initial public offering has been accelerated by Cross Match's recent acquisition of German-based Smiths Heimann Biometrics in a stock deal for an undisclosed amount. Cross Match of Palm Beach Gardens is about twice the size of its European rival, and both companies compete in the securities biometrics industry.

In light of Cross Match's first acquisition, "and the first institutional investor in our company, we are large enough to go public next year," Johnson said. "The faster you grow, the more capital you need to grow. The valuations they are putting on this industry, the multiples in the industry, really kind of indicate you go that way. No decision has been made, but we are in a position that we can [do that] at any time now."
Cross Match acquired Smiths Heimann from its parent, Smiths Group, which is traded on the London Stock Exchange. The new entity will operate under the name Cross Match and will keep its headquarters in Palm Beach Gardens. Production of former SHB designs will continue in Jena, Germany.
Smiths Group's willingness to take stock in Cross Match is a substantial gain, Johnson said, "because it gives a lot of credibility to what we're doing. They figured their division could go further with us than on their own."

Cross Match, a pioneer in forensic-quality digital fingerprint and palm-print identifications, is a global provider of security biometrics. The private Florida Corporation has more than 100 shareholders. Corporate goals have been flexible since it was founded, and none of the principals has wanted to take it public too early. Johnson has spent many years as an executive at Paine Webber, and many other charter investors had backgrounds in business finance.

Cross Match's signature product, the digital live-scan, or ID 1000 biometric fingerprinting system, is in place at dozens of regional airports for employee background checks, and at 70 of the nation's 103 nuclear power plants.

Security biometrics in 2000 was a $500 million industry worldwide — with about 90 percent generated by law enforcement and 10 percent from commercial customers.

Cross Match initially caught the attention of military agencies and law enforcement, especially the FBI, which sent agents to be trained on its digital live-scan products and software. Johnson, however, anticipates greater business in the future in the commercial sector, as this acquisition raises its profile.
The Department of Justice and the Department of Homeland Security are customers, and the U.S. military uses the live-scan devices in dozens of countries, including Cuba at Guantanamo Bay, and the Middle East.

"We're all over Iraq and Afghanistan, but we sell it to the government and law enforcement. Going international and commercial would be the big home run. We got into 100 of the largest financial corporations in the country last year. That broke the ice. And I'm talking about companies like J.P. Morgan and Citicorp," Johnson said. 

Fred Rustmann, a former Mañana Lane resident who moved to Trump Plaza, has monitored the progress of Cross Match since its inception and said he isn't surprised it is gaining commercial customers.
"I've vicariously followed it. I liked the company back then, and I like it even more now. Since [Sept. 11, 2001], it stands to reason that [commercial demand] is catching up. A lot of private companies want it for access to their buildings," said Rustmann, head of CTC International Group Ltd., a corporate intelligence firm in West Palm Beach that gathers foreign intelligence for Fortune 500 companies.

"It's very good if we can track people through fingerprints or irises, so people can't be traveling on phony passports; so people who have been banned can't come back into the country."

In 2002, Cross Match was named the fifth-fastest-growing private company by Inc. magazine. The Inc. 500 ranks firms according to sales growth over the previous five years. In 1998, its first year on the market, the firm reported revenues of $211,305, compared to $24.5 million in 2002.

Johnson did not release current sales, but he said he expects to outpace publicly traded rival Identix by next year. The Minnesota-based firm reported $73 million in sales for the year that ended June 30.
Cross Match has about 160 employees in Palm Beach Gardens and will gain about 90 in Germany.