Acquisitions of cybersecurity companies have been trending up annually since 2013. However, this year, they are on pace to fall a bit short of last year’s peak.
A notable trend that cuts across both investments and acquisitions activity is the movement away from more focused cybersecurity applications and toward more comprehensive cybersecurity offerings.
That means cybersecurity companies are acquiring peers that offer single-point solutions, likely in an effort to piece together more holistic security offerings. In fact, of the nearly 40 VC-backed cybersecurity companies acquired in 2016, over half (53%) were absorbed by another cybersecurity company.
This year, companies across the spectrum have snapped up cybersecurity startups. Some relatively large, still private cybersecurity companies have acquired other companies in the space, including Lookout (acquired Bluebox Security) and Carbon Black (acquired Confer Technologies). In addition, public cybersecurity companies such as Symantec, Fortinet, and FireEye have also been active acquirers in 2016, as have other large corporations, including IBM, Cisco Systems, Ant Financial Services Group, Oracle, and Salesforce.
Using CB Insights database we looked at acquisition activity in cybersecurity over the last five years and created a timeline of acquirers and acquisition targets in 2016.
Global acquisition activity
Acquisitions rose steadily from 2013 through 2015, but are on track to fall short of the high we saw last year. Since 2012, five cybersecurity companies have been acquired for $1B+: Blue Coat Systems ($4.65B) acquired by Symantec, Forcepoint ($1.9B) acquired by Raytheon, AirWatch ($1.54B) acquired by VMware, SonicWall ($1.2B) acquired by Dell Technologies, and MANDIANT ($1.1B) acquired by FireEye.
This year, Q1 started off slow with just five acquisitions, but activity has since picked up. In Q2’16 we saw the second highest quarterly acquisitions total since 2012, at 13, tied with Q3’15. In Q3’16 and so far in Q4’16 QTD (11/21/2016), there have been 10 acquisitions in each quarter.
2016 cybersecurity acquisition timeline
Nine cybersecurity companies were acquired this year for $100M+. Three were acquired for $500M+ including: Krux Digital ($750M), and Ping Identity ($600M), and Bain Capital-backed Blue Coat Systems (acquired by Symantec for $4.65B), the highest-valued acquisition since 2012.
Notable acquisitions by cybersecurity companies in Q3’16 include: Core Security (acquired Damballa), StackPath (acquired FireBlade), and Ping Identity (acquired Unbound ID). In Q4’16, cybersecurity company Nehemiah Security acquired Triumfant, and separately Proofpoint acquired FireLayers.
Also this quarter, the investment firms BC Partners and Medina Capital together acquired three cybersecurity startups: Easy Solutions, Catbird Networks, and Cryptzone.
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