Cox Enterprises Inc., one of the largest privately-held conglomerates in the U.S., today announced it’s buying OpenGov in a deal worth $1.8 billion.

The company, which is a family-owned provider of communications and automotive services, among other interests, already held a minority stake in OpenGov prior to today’s announcement, which will lead to its taking full ownership of the company.

Under the terms of the deal, OpenGov’s executive teams and employees will roll over a significant chunk of their equity, though they will continue to operate the company under Cox’s umbrella.

San Francisco-based OpenGov is the creator of a software platform for city governments that assists with accounting, asset management, budgeting and other governance tasks. It’s widely used by cities in the U.S., with customers including the city of Los Angeles, which is said to be using the platform to organize the 2028 Summer Olympics. Another customer includes an unnamed county in Oregon, which is using OpenGov’s software to distribute funds across its community more efficiently to try and tackle problems around homelessness.

OpenGov’s board of directors features a number of prominent names in Silicon Valley, including former Cisco Systems Inc. Chief Executive John Chambers, Palantir Technologies Inc. co-founder Joe Lonsdale and the venture capitalist Marc Andreessen. Once the deal is completed, the board will consist of a number of existing members, plus representatives from Cox.

The $1.8 billion valuation of OpenGov distinguishes the company as a leader in the government technology market. Alongside the Israeli firm Optibus Ltd., which was valued at $1.3 billion after raising $100 million in a 2022 Series D funding round, it is one of the few gov tech companies to achieve a billion-dollar plus valuation.

OpenGov said the acquisition will enable it to make “long-term strategic decisions” that will benefit its user base for decades to come. It will obtain fresh capital from Cox to accelerate product development and make its own acquisitions to strengthen its offerings, OpenGov founder and CEO Zac Bookman told the Wall Street Journal. “We want to empower a more effective and accountable government,” he said.

Under Cox’s umbrella, OpenGov believes it will be better-positioned to address the risks of cyberattacks and ransomware, as well as the growing talent gap that it says is being driven by retirements in government workforces.

Cox President and Chief Financial Officer Dallas Clement said OpenGov is enabling governments to accelerate their digital transformations and boost adoption of artificial intelligence- and cloud-based technologies. He told the Journal that the government tech industry has largely been left behind by these trends, and that the vast majority of their information technology operations are still located on-premises.

OpenGov, which has around 1,900 customers in total across all 50 U.S. states, says governments also use its platforms for asset management, permitting, reporting and transparency. Its clients include state, city and county governments.

The company added that business has been going well lately, with a 76% annual increase in gross new sales in the fourth quarter.

Cox, which is based in Atlanta, is a 125-year old company that does about $23 billion in annual revenue. It has a long history of acquiring companies with local market expertise, with interests in numerous industries, including media, electric vehicles, EV supply chains, agriculture and clean energy. Some of its holdings include Autotrader.com Inc., the online car marketplace, and Axios Media Inc.

The company is probably best known for being the parent firm of Cox Communications Inc., the third-biggest cable TV provider in the U.S. with around 6.5 million subscribers. It also owns Cox Automotive Inc.

In addition, Cox has an established presence in the gov tech sector. Besides its minority stake in OpenGov, it also has a stake in the emergency services technology provider Carbyne Inc., plus a venture arm called Socium Ventures that focuses on the sector.

Holger Mueller of Constellation Research Inc. said Cox is making a surprising move by investing into such an established software firm, especially one that operates in the government sector. “There is an opportunity to modernize government systems, but it’s a vertical that moves notoriously slowly and is highly regulated,” the analyst said. “So it’s not clear yet how Cox intends to get a return on its investment, though the IPO route is a likely option.”

The Journal said today’s acquisition is one of the largest venture-backed software firm exits in recent history, coming at a time when the market for initial public offerings has cooled, making it more difficult for startups to start trading publicly.

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