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-Maxwell Maltz

Internet Security Firms Accuvant and FishNet Security To Merge

martinwolf Transaction Analysis

Financial Information Not Disclosed

Transaction History

  • Investcorp Acquires FishNet: Jan. 23, 2013
  • Blackstone Acquires Accuvant: March 11, 2014
  • Accuvant Acquires FishNet: Nov. 5, 2014

Transaction Facts

  • Internet security firms Accuvant and FishNet Security announced yesterday that the two companies would merge, with Accuvant investor Blackstone (NYSE:BX) retaining majority ownership in the combined company.
  • According to media sources, Accuvant and FishNet both generate $700-750 million in annual revenue.
  • Current investors, including existing management, PE firm Sverica International and FishNet corporate owner Investcorp are maintaining minority interests in the combined company.

Focus on Cybersecurity Leads to Record Demand

  • Go Big or Go Niche: The multiple data breaches over the past year have led to a significantly increased focus on cybersecurity in the corporate world. Large private equity firms like FishNet and Accuvant can take advantage of economies of scale to best service this demand, while smaller players need to either establish niche practices or lose out. Together, the companies will be especially competitive, placing new pressure on their smaller peers.
  • Private Equity as a Facilitator: Both Fishnet and Accuvant were backed by major private equity investors-Accuvant by Blackstone and FishNet by Investcorp. The speed of the acquisition (as with Aetna’s acquisition of bswift) demonstrates all involved companies understand that the longer they exist separately, the more they erode margins and hamstring future value creation.
  • Private Equity Unlocking New Value Creation for VARs: As we wrote in March when Blackstone acquired Accuvant, Private Equity firms have the potential to substantially increase the value of a VAR by helping it develop and enhance its services capabilities (see CompuCom). The current shift to the cloud in IT Security provides a new opportunity for high-value transformation with investor support.

For more information, view the press release by clicking here. martinwolf was not the advisor in this transaction.

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