KnowBe4 Buyout: Vista Equity Acquires Cybersecurity Company for $4.6 Billion

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Private equity firm Vista Equity Partners is acquiring security awareness training company KnowBe4 for $4.6 billion, the companies confirmed today.

This is technology M&A deal number 887 that MSSP Alert and sister site ChannelE2E have covered so far in 2022. See more than 2,000 technology M&A deals involving MSPs, MSSPs & IT service providers listed here.

The deal surfaced less than one month after KnowBe4 disclosed that Vista Equity was pursuing the security awareness training software company.

Vista Equity Acquires KnowBe4: Executive Perspectives

In a prepared statement about the deal, KnowBe4 CEO Stu Sjouwerman said:

“Today’s announcement is a testament to the success of our strategy and the strength of our incredible team. This acquisition by Vista represents the next phase of our journey. KnowBe4 has a strong record of performance, as evidenced by our market-leading platform and global customer base. Under Vista’s ownership, we will have access to additional resources and support, which will help us achieve our goals and deliver enhanced value to our customers. We look forward to partnering with Vista’s team to continue empowering businesses worldwide to strengthen their human firewall and make smarter security decisions every day.”

Added Michael Fosnaugh, co-head of Vista’s flagship fund and senior managing director:

“As a trusted partner to enterprise software companies around the world, we make a point to invest in businesses that make a difference and have a demonstrated track record of success. We look forward to leveraging our deep understanding of the business to help Stu and his talented and experienced team address the human element of cybersecurity.”

Concluded  Rod Aliabadi, managing director at Vista:

“As a significant investor in KnowBe4, we could not be more excited to take this next step in our journey together. We have long appreciated the work that KnowBe4 does in strengthening the human layer of cybersecurity through educating employees on how to identify social engineering and related cyber threats.”

The deal is expected to close in the first half of 2023.

KnowBe4 Cybersecurity Business Background, Channel Partner Program

KnowBe4 is best known for its cybersecurity awareness training platform. The company, based in Clearwater, Florida, has 1,694 employees listed on LinkedIn as of September 23, 2022.

KnowBe4 launched a successful IPO in April 2021. Fast forward to mid-2022, and the company’s Q2 revenue was $80.8 million, up 36.1% compared to Q2 of 2021. Fully 88% of KnowBe4’s customers are in the SMB market (defined as organizations with less than 1,000 employees) and 12% are in the enterprise space, the company said in August 2022.

On the channel front, KnowBe4 continues to “make meaningful progress on hiring key resources in our channel team and building marketing and distribution capabilities for our channel partners,” CFO Bob Reich said during the company’s August 2022 earnings call. Still, the company did not disclose specific channel partner metrics. It sounds like most of the channel partner push is outside of the United States. KnowBe4 has been known to suffer some channel conflict within the U.S., according to MSSP Alert readers.

Key KnowBe4 company moves for 2022 include launching:

Next up, the company is preparing to launched  SecurityCoach — which is based on the SecurityAdvisor acquisition of 2021. The product will allow customers to “identify and remediate unsecure actions in real time through connections with our customers’ existing security stack,” KnowBe4 asserts. SecurityCoach was in closed beta testing in August 2022, and on track for general release during the fourth quarter.

Vista Equity Partners: Example Private Equity Investments

Meanwhile, Vista Equity Partners has considerable experience in the cybersecurity and data protection markets. Some of the acquisitions and investments have involved MSP-friendly companies. Example deals include:

Within MSP circles, Vista Equity is best known for acquiring, building and then selling Datto to Kaseya.

Additional private equity firms with the scale to potentially acquire KnowBe4 include Thoma Bravo and Insight Partners, though we don’t know if those firms placed bids for the cybersecurity company.

Note: Blog originally published in September 2022. Updated thereafter with new details about the potential KnowBe4 company sale.

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