IoT network expansion grows potential entry points for cyber-attackers
London, 14 November 2019 - The cybersecurity sector’s largest ever deal, Broadcom’s landmark acquisition of Symantec for $10.7 billion, set the tone for an uptick in transaction volume and continuously strong valuations, according to Hampleton Partners’ latest analysis of global cybersecurity mergers & acquisitions activity.
Hampleton’s Cybersecurity M&A report highlights the popularity of cybersecurity vendors as all industries seek protection from cyber-attacks.
Cybersecurity transaction volume rose by 15 per cent in the second-half of 2019 compared to that of 2H2017. Valuations have also remained healthy, with EV/S multiples consistently trading around 5x for the past four years – significantly above the 3x valuations seen in the wider enterprise software space.
Hampleton Partners, the international technology M&A and growth finance advisors, cited three key trends impacting the race to secure cybersecurity vendors: an exponential increase in the number of devices connected to enterprise IoT networks, providing potential entry points for cyberattackers; growing volumes of personal data that needs to be secured; and mounting regulatory and financial penalties for cyber insecurity.
Axel Brill, director, Hampleton Partners, said: “The number of cyberattacks, as well as their complexity, is growing rapidly. Cybersecurity vendors will have to move quickly to keep ahead of malware and hackers.
“Cyberattacks are some of the most dangerous threats for businesses across all sectors and industries, demanding management time and increased investment in technologies like AI to protect against vulnerabilities. There’s no doubt that AI-focused cybersecurity vendors will be the most sought-after future M&A targets in this sector.”
Palo Alto Networks takes top spot in cybersecurity acquisition table
The top three acquirers in cybersecurity over the past 30 months were Palo Alto Networks (seven deals), J2 Global (six deals) and Thoma Bravo (six deals).
Palo Alto is the most active acquirer on an annual basis for the second year in a row (measured by number of acquisitions completed in the last 30 months). After completing three transactions for a combined $563m last year, Palo Alto spent nearly that amount on acquiring security automation and orchestration software provider Demisto for a total of $560m in February. In May, the company also acquired enterprise container and cloud security software provider Twistlock for $410m.
Overall, the company nearly doubled its M&A spending year-on-year, spending almost $1.1bn so far this year on a total of four cybersecurity transactions. In addition to being the most prolific acquirer, Palo Alto has also paid some of the highest valuations disclosed in the space, paying 46.7x and 27.3x EV/S for Demisto and Twistlock respectively.
Palo Alto Networks, also paid 15x EV/S to acquire Zingbox, the AI-based IoT device management and threat system that analyses and detects threats by identifying behavioural anomalies.
Download the full Hampleton Partners’ Cybersecurity M&A Report here: https://www.hampletonpartners.com/reports/cybersecurity-report/
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Note to Editors:
Hampleton Partners’ M&A Market Reports are compiled using data and information from the 451 Research database (www.451research.com).
About Hampleton Partners
Hampleton Partners is at the forefront of international mergers and acquisitions and corporate finance advisory for companies with technology at their core. Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled advice to tech entrepreneurs and companies which are looking to accelerate growth and maximise value.
With offices in London, Frankfurt and San Francisco, Hampleton offers a global perspective with sector expertise in: Automotive Technology, AI, Cybersecurity, Fintech, Healthtech, IoT, VR and AR, Digital Marketing, Enterprise Software, SaaS & Cloud and eCommerce. Download sector reports here: https://hampletonpartners.com/research/
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