Cybersecurity Mergers and Acquisitions: Still Hot
High profile security breaches, the global digitization of business and new technologies are driving merger and acquisition (M&A) volumes and valuations to record levels surpassing that of the last two years, a new report said.
Anyway you parse it, the cybersecurity market is where it’s at for deal makers. Since 2016, there have been 426 acquisitions in the cybersecurity sector. Analysts expect the segment to grow some 60 percent to $212 billion by 2022 and acquisition-oriented companies and private equity firms are increasingly wanting in. So far this year, buyers and sellers have completed 141 transactions, according to M&A consultants Hampleton Partners in its Cybersecurity M&A Market Report.
Among the total are nine particularly notable deals worth about $500 million featuring the private equity firms Thoma Bravo and Francisco Partners as well as Relx and AT&T, the report said. Cisco’s acquisition of Duo security for $2.4 billion at 18.8x sales and RELX’s acquisition of ThreatMetrix for $821 million at 11.7x sales have raised valuations to a record 5.6x sales for the trailing 30-month median level, the London-based Hampleton said.
Private equity firms have taken a noticeable stake in the cybersecurity market. More than 25 percent of the top 40 transactions over the last three years have involved private equity investors, including Thoma Bravo, TPG Capital, Francesco Partners and Vista Equity Partners.
Here’s a list of the top cybersecurity M&A deals so far this year:
- Bitdefender acquired RedSocks for an undisclosed sum
- Palo Alto bought RedLock for $173 million
- Mimecast purchased Solebit for $96 million
- Twitter snapped up Smyte for an undisclosed sum
- BlackRock/Pamplona bought Cofense for $400 million
- J2 Global acquired ThreatTrack for $77 million
The top acquirers so far this year:
- Symantec, J2 Global each with seven deals
- Accenture, Convergint Thoma Bravo, Proofpoint each with five deals
- Cisco, Palo Alto Networks each with four deals
Of the deals by cybersecurity sector:
- 31% transaction (financial)
- 23% identity & access management
- 12% network security
- 12% VPNs, log management
- 10% anti-malware
- 6% each mobile security, IT security services
“The bullish M&A market for cybersecurity assets is driven by a booming sector and increasingly fewer acquirable independent targets as the consolidation continues,” the report reads. Hampleton called Palo Alto Networks the most active “strategic buyer” in 2018 with three completed cybersecurity transactions. Those deals for Redlock, Evident.io and Secdo together cost the network security giant $563 million and fully fleshed out the company’s cybersecurity portfolio, Hampleton said.
“Game-changing cybersecurity technology is now entering newer verticals such as connected and autonomous vehicles, cryptocurrencies and digital payment services, presenting new challenges and major opportunities for startups and scaleups who can help businesses protect their valuable IP and customer data,” said Henrik Jeberg, Hampleton director.