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Private Equity Firm Acquires McAfee Enterprise Security Business: MSP, MSSP Implications

Private equity firm Symphony Technology Group (STG) is acquiring McAfee's enterprise security software business for $4.0 billion, ChannelE2E reported this morning.

This is technology M&A deal number 161 that MSSP Alert and sister site ChannelE2E have covered so far in 2021. See all technology M&A deals for 2021 and 2020 listed here.

On service provider front, McAfee’s enterprise business both competes and cooperates with MSPs and MSSPs (managed security services providers). In a 2020 SEC filing that briefly mentioned MSSPs, McAfee stated:

“Some of our enterprise customers have outsourced some or all of the management of their information technology departments to large system integrators. Some customers have also outsourced portions of their cybersecurity operations to MSSPs. If this trend continues, our established customer relationships could be disrupted, and our solutions could be displaced by alternatives offered by system integrators and MSSPs that do not include or use our solutions. These displacements could negatively impact our financial results and have an adverse effect on our business.”

Security Built for MSPs, MSSPs

In stark contrast, numerous cybersecurity software and appliance companies have successfully built MSP- and MSSP-centric partner programs that either minimize or completely eliminate channel conflicts with service providers.

For instance, 18 percent of MSSPs name Fortinet as the top technology company assisting service providers with cybersecurity business strategies, according to a 2020 MSSP Alert survey.

Also, SolarWinds MSP (soon to be rebranded as N-able) leverages SentinelOne for an endpoint security platform sold to MSPs. The effort includes deep integration with SolarWinds MSP's RMM (remote monitoring and management) software for MSPs.

Amid the MSP and enterprise customer momentum, SentinelOne is preparing an IPO that could achieve a $10 billion valuation.

McAfee Enterprise Alternatives: CrowdStrike Grows Rapidly

McAfee has also faced intense competition from fast-growing endpoint detection and response (EDR) software companies — such as CrowdStrike, among many others.

CrowdStrike’s revenue was $232.5 million in Q3 of fiscal 2021, up 86 percent from Q3 of fiscal 2020, the company disclosed on December 2, 2020.

Also of note: Major technology companies such as Cisco SystemsMicrosoft and VMware  have pushed deeper into the cybersecurity market.

Still, the McAfee enterprise security business continues to generate about $1 billion in annual revenue. The big question: How will new owner STG invest in the business — especially in terms of the enterprise group’s partner program? We’ll be watching and listening for clues from STG.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.