ADT Sells MSSP, MDR Security Business Datashield to Lumifi Cyber

ADT's expansion from smart home security into the corporate MDR (managed detection and response) market apparently has ended. The evidence: ADT has sold MDR security provider Datashield to Lumifi Cyber, which is backed by private equity firm HCAP Partners. Financial terms of the deal were not disclosed.

This is technology M&A deal number 751 that MSSP Alert and sister site ChannelE2E have covered so far in 2022.

Lumifi Cyber CEO Previously Built, Led Datashield

The Datashield business transitions back to a familiar executive leader. Indeed, Lumifi Cyber CEO Michael W. Malone previously built, led and sold Datashield to ADT in 2017. Malone exited ADT in March 2019, and resurfaced to launch Lumifi as CEO in January 2022.

Now, Lumifi owns those Datashield assets. The combined business offers:

The combined company also has a Security Operations Center staffed by U.S.-based analysts, ex-military and former DoD (Department of Defense) security experts who monitor end-customer systems, Lumifi said.

Private Equity Funds MDR M&A Deal: Executive Perspectives

In a prepared statement about the deal, Malone said:

Added Frank Mora, partner at HCAP Partners:

Private equity firm HCAP Partners focuses on lower-middle market companies throughout California and the Western United States. The firm typically invests $3 million to $25 million in established businesses that generate $10 million to $100 million in revenues in the healthcare, software, services, and manufacturing industries.

MDR Security Market Forecast, M&A Activity

The market for managed detection and response (MDR) security services will reach $5.6 billion by 2027, which represents a 16.0% compound annual growth rate (CAGR) from 2022, according to MarketsAndMarkets.

The May 2022 research report is far more bullish than an August 2021 research report from Infinity Business Insights, which pegged the global MDR market at only $2.2 billion by 2027.

Still, both research reports pointed to similar CAGR growth rates for MDR security services. In fact, MDR now ranks among the core eight managed security services typically offered by MSSPs, according to Gartner. And more than 90% of MSSPs now offer some form of MDR services, according to the annual Top 250 MSSP survey results for 2022.

Amid that backdrop, M&A activity in the MDR market remains strong, and more MDR M&A deals are expected soon.