Cyber attacks are prompting a boost in cybersecurity M&A, figures from Hampleton Partners reveal
Both strategic buyers and private equity firms are showing a renewed interest in cybersecurity acquisitions, new figures from technology-focused merger and acquisition (M&A) advisor Hampleton Partners reveal.
After 2010, following the period when software-based cybersecurity systems were being hoovered up in massive deals such as Intel’s $7.68bn takeover of McAfee, the value of deals done dropped off a cliff to $3.6bn in 2011 from $14bn in 2010.
But that figure has been creeping up, and the value of cybersecurity deals completed globally last year hit $13.4bn.
The value of strategic and private equity (PE) cybersecurity acquisitions since 2010
According to Jonathan Simnett, director at Hampleton Partners, this indicates an increasing interest in the cybersecurity “as a service” model, where a business offers a package of cybersecurity services without the customer having to operate software.
Importantly the interest of private equity buyers has also been increasing, and last year they completed 12.4 per cent of the cybersecurity deals by number.
To Simnett, this indicates that private equity buyers are still seeing value in bundling together small cybersecurity businesses with a view to selling them on to a larger conglomerate.
Read more: Blackberry acquires British cybersecurity company Encription and launches business security consultancy
In turn, this indicates that the current market is not yet at a peak, since there will be further large transactions to come.
Simnett also points to fact that the prices of the businesses are creeping up. Enterprise value-to-sales multiples, or how much it costs to purchase a companies sales, have rocketed from 2.3-times in 2013 to 5.5-times so far in 2017 for companies bought by strategic buyers.
Effectively this means that the purchasers are confident that future sales will bring in the cash – and with cyber attacks on multinational businesses becoming increasingly common, it seems this is a safe bet.
Read more: One in five businesses suffered a cyber-attack last year
Almost as if to prove the point, Hampleton Partners yesterday announced its client NMi Metrology and Gaming, a Wales-based compliance testing and auditing laboratory which works in gaming and IT security, had been sold to US-based global company GLI Group.
Other areas of tech also hold promise for the M&A market, according to Simnett, including machine learning and artificial intelligence and autotech.
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