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CyberScope – 2019 Market Review

By James Hillmen 24 Jan 2020

Welcome to the 2019 edition of the CyberScope – Results International’s market update for the global cybersecurity sector.

Review of 2019 in the CyberScope:

  • Significant market consolidation in the sector with Broadcom acquiring publicly-listed Symantec’s enterprise security business and Accenture subsequently acquiring the
    services unit, VMware acquiring publicly listed endpoint protection firm Carbon Black and OpenText acquiring cloud-backup and disaster recovery solutions firm Carbonite.

    • Results International advised on two security transactions in 2019; Outpost24 on its acquisition of Pwnie Express and Intragen on its investment from FPE Capital.
  • Cybersecurity increased in prominence as an area of M&A focus for the telco majors: Comcast (BluVector), Broadcom (Symantec security), Verizon (Protectwise), Orange
    (Securedata and Securelink), Swisscom (United Security Providers) and NTT (WhiteHat) all choosing to buy vs build.

Review of 2019 predictions:

  • As predicted in 2019, there was substantial private investment at high valuations driven by innovative cyber products and services:
    • Acronis (raised $147m from Goldman Sachs), Shape Security (raised $51m led by C5 Capital), Knowbe4 (raised $300m from KKR) and Cyberreason (raised $200m led
      by SoftBank) all reached unicorn ($1bn+ valuation) status.
    • Funds were also deployed to take publicly listed businesses back into private hands with Thoma Bravo acquiring Sophos for c.$4bn at 5.5x revenue.
  • This was a strong year for cyber businesses listing publicly: Tufin (36%), Crowdstrike (71%), Ping Identity (34%) and Cloudflare (20%) all increased their share price on Day 1
    and continue to trade well above their initial listing valuation.

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Predictions for 2020:

  • In 2020 we expect more of the same!
  • We expect to see further high-profile breaches and increased discussion of cyber risks, not least nation-state action given the US Presidential Election and the UK’s post-
    Brexit trade negotiations.
  • The macro-themes within cyber and the technology sector will drive continued innovation, investment and consolidation, at historically high levels of valuation across the
    sector.

Cybersecurity, from growth equity raises to strategic exits, continues to generate great interest, making now an excellent time to be contemplating a fundraising, exit or growth through acquisition in the cybersecurity space– if you are, please do get in touch.

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James Hillmen

Analyst

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