As Protocol reports, concerns about economic growth could force startups backed by venture capital to make some tough choices. Dave DeWalt, the former CEO of FireEye and McAfee, told the news service that some startups have already been cutting jobs and many will likely be acquired. The industry is “heading towards a consolidation window,” said DeWalt, currently the founder and managing director of venture firm NightDragon.
The predicted wave of consolidation could be a blessing in disguise for chief information security officers, who have been grappling with the complexity of an array of security tools from multiple vendors. Frank Dickson, group vice president for security and trust at IDC, told Protocol that a streamlining of the cybersecurity space is “necessary.”
Private equity firms have been dipping a toe into cybersecurity acquisitions, as S&P Global Market Intelligence notes. Specifically, private equity has been eying the identity and access management subsector. Garrett Bekker, principal research analyst at 451 Research, told S&P that examples include Thoma Bravo’s recently completed $6.9 billion deal for SailPoint Technologies Holdings and in-process $2.8 billion deal for Ping Identity Holding. Bekker added that vendors in the identity and access management space are finding themselves in competition with bigger players like Microsoft and Okta.
According to S&P, in the year through August 12 there were 77 private equity and venture capital deals totaling $12.37 billion in the private equity and venture capital deal volume in the identity and access management subsector. While that does not seem to be on pace to reach last year’s $34.44 billion figure, which was fueled by McAfee’s $12 billion private-equity buyout, Bekker said a number of potential targets remain, as does the capital to acquire them.
CSO also reports that cybersecurity mergers and acquisitions are likely to continue to gain steam, particularly in the identity and cloud security spaces. Some vendors have been looking to add capabilities, as seen in Recorded Future’s deal for SecurityTrails, which brings its attack surface monitoring tools. Other acquirers have been looking to firm up their place in the market.