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Forescout Files Lawsuit vs Private Equity Firm for Dropping Acquisition

Forescout Technologies has filed a lawsuit against Advent International, alleging that the private equity firm illegally terminated an acquisition agreement with Forescout. The lawsuit surfaces less than one week after Advent backed out of a $1.9 billion deal to buy the cybersecurity company.

Forescout is asking the Court to “compel Advent to honor its commitments and immediately complete the pending acquisition of Forescout.” Advent walked away from the deal on May 15 — three days before the acquisition was scheduled to close.

MSSP Alert has reached out to Advent for comment about the suit.

Mergers, Acquisitions and the Coronavirus Pandemic

The legal feud highlights major challenges within the M&A market amid the coronavirus pandemic. Amid the economic fallout and heightened financial market uncertainty, private equity firms have scrapped multiple technology acquisitions.

In a prepared statement about the lawsuit,  Theresia Gouw, chair of the Forescout board, said:

“We have satisfied all conditions to closing under our merger agreement, and a material adverse effect has not occurred. The only change since the merger agreement was jointly executed in February is the deepening of the COVID-19 pandemic, which has significantly impacted global macro-economic conditions. All companies have been challenged by this pandemic, and it is highly disappointing that Advent would attempt to exploit market volatility to renege on its contractual obligations, particularly when the merger agreement explicitly excludes the effects of a pandemic as a material adverse event. Advent is required to promptly complete the transaction. We are taking immediate action to enforce Forescout’s rights and ensure that Advent fulfills its obligations. We are confident that the steps that we are taking are in the best interests of Forescout and its shareholders.”

Meanwhile, Forescout CEO Michael DeCesare is striving to assure shareholders, employees and customers that the company remains on solid financial footing regardless of the buyout status. He stated:

“I remain confident in the strength of Forescout and its incredible team. Forescout is in a strong financial position, with $100 million of cash on hand as of March 31, 2020. We are well positioned for success and the fundamentals of our business have not changed. Customers around the world trust Forescout to help solve their most pressing security challenges, and that’s exactly what we are doing.”

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