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Cybersecurity M&A Activity Hits a Record High

Cybersecurity M&A deal volume hit a new record high in 2018, according to an annual cybersecurity almanac published by Momentum Cyber.

The 900-page report from the boutique advisory provides a telling insight into what investors think is hot in the cybersecurity market.

There were a record 183 cybersecurity M&A deals in 2018, the report shows, with 96 percent involving private companies.

The chart below shows that investors are particularly seeking out identity and access management specialists, security consulting companies and security operations/threat intelligence firms. Interest in managed security service provider (MSSP), meanwhile, fell sharply year-on-year.

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There were five cybersecurity IPOs in 2018 meanwhile, versus three in 2017, with the average IPO raising $364 million in 2018. Momentum Cyber, which has advised on deals worth billions, most recently supporting Micro Focus’s acquisition of Canada’s Interset, said it expects sustained growth in 2019.

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With over 3,000 cybersecurity vendors struggling to stand out in a $100 billion global market, many moved to raise funding in a bid to grow and cut through the competitive noise, the report shows.

As a result 2018 was a record year of amount raised, at $6.2 billion in capital raised via 408 funding rounds in the cybersecurity sector.

Cybersecurity M&A: Momentum Cyber’s 2019 Predictions

In terms of key predictions for the market in 2019, Momentum Cyber said it anticipates the following:

  • Hybrid cloud will drive demand for cloud agnostic security, data protection, and compliance tools.
  • Significant IoT, OT, & ICS security incidents will bolster interest in the IT/OT security space as a result.
  • Zero Trust offerings will gain widespread acceptance as the enterprise standard security model, as network security and identity and access management (IAM) converge.
  • Third party and software supply chains will continue to emerge as critical new threat vectors.
  • A volatile stock market and expanding buyer universe will make later stage companies view M&A as an even more attractive alternative to an IPO, further increasing cybersecurity M&A deal volume.
  • Security services providers will continue to increase market share as more organisations elect to use managed solutions to alleviate vendor fatigue and the growing cybersecurity skills shortage.

cybersecurity M&A

In terms of listed cybersecurity companies, meanwhile these were 2018’s top five performers by stock price:

Okta – up 149 percent

Zscaler – up 145 percent

Secureworks – up 90 percent

Cyberark – up 79 percent

Rapid 7 – up 67 percent

This article is from the CBROnline archive: some formatting and images may not be present.

CBR Staff Writer

CBR Online legacy content.