Thoma Bravo Ends Darktrace Acquisition Discussions, Cybersecurity Firm Discloses -

Private equity firm Thoma Bravo has ended discussions to potentially acquire Darktrace, the cybersecurity software provider disclosed.

Chatter about Thoma Bravo potentially buying Darktrace surfaced in August 2022. Thoma Bravo had until September 12 to "either announce a firm intention to make an offer for Darktrace in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer..." an SEC filing indicated.

Fast forward to September 8, and the private equity company has decided not to pursue the Darktrace acquisition at this time. Darktrace's stock fell about 30% on the news.

So what's next? Under British takeover rules, Thoma Bravo cannot make an offer for Darktrace for six months unless another company makes a firm offer or it reaches agreement with Darktrace’s board, Reuters reported.

Darktrace launched its IPO (initial public offering) in April 2021 at a valuation of $2.37 billion. Similar to the overall cybersecurity market, the company's stock has experienced major turbulence amid rising interest rates, surging inflation and an investor shift from growth stocks toward profit-generating stocks. The company's stock jumped 17% amid the buyout speculation, and Darktrace's valuation was roughly $3.2 billion as of August 16, 2022, according to SeekingAlpha.

Darktrace Cybersecurity and Partner Business Focus

Darktrace, founded in 2013, is based in Cambridge, United Kingdom. The company's software is designed to prevent, detect and respond to cybersecurity events such as ransomware, SaaS application and cloud infrastructure attacks. Healing capabilities also are central to the software effort. Darktrace typically targets customers that have at least 250 or more employees.

Darktrace has a partner program that builds channel, technology and integration relationships. Roughly 500 companies have joined the partner program, though we don't know how many MSPs and MSSPs have adopted the cybersecurity platform to protect end-customers.

According to a Darktrace fact sheet for investors, the company:

Has roughly 1,700 employees and 6,500 customers;

generated $193 million in revenue for the first have of 2022, up 52% from the first half of 2021; and

gets most of its revenue from the U.S. and Canada (38%), followed by Europe (24%), rest of world (21%) and the UK (17%).

Darktrace has grown both organically and through acquisitions. The company acquired attack surface management firm Cybersprint for approximately $53.7 million in February 2022.

Thoma Bravo: Cybersecurity and MSP Software Investments

Thoma Bravo has extensive experience in and around the cybersecurity market, and is a familiar name in the MSP software sector. The private equity firm also owns:

Identity security companies Ping Identity and SailPoint Technologies;

email security firm Proofpoint;

MSP software providers ConnectWise and N-able; and

MSP-friendly security company Sophos.

Still, Thoma Bravo and other private equity firms have been recalibrating their buyout formulas in recent months amid falling valuations for some publicly held SaaS companies.