BY Fraser Tennant
Cyber attacks continue to be one of the most dangerous threats to businesses in all industries, with their number and complexity growing rapidly, according to a new report by Hampleton Partners.
In addition to this rapid increase, global digitalisation, new regulations, high-profile incidents and new technologies have led to an increasing number of cyber security acquisitions over the past two years, with deal volume well above those typically seen for enterprise software or IT services.
Setting the tone for an uptick in deal volume and continuously strong valuations was the cyber security sector’s largest ever deal: Broadcom’s landmark acquisition of Symantec for $10.7bn in August 2019.
In its ‘M&A market report 2H 2019: Cybersecurity’, Hampleton Partners cites three key trends impacting the race to secure cyber security vendors: (i) an exponential increase in the number of devices connected to enterprise Internet of Things (IoT) networks, providing potential entry points for cyber attackers; (ii) growing volumes of personal data that needs to be secured; and (iii) mounting regulatory and financial penalties for cyber insecurity.
“The number of cyber attacks, as well as their complexity, is growing rapidly,” said Axel Brill, a director at Hampleton Partners. “Cyber security vendors will have to move quickly to keep ahead of malware and hackers.
“Cyber attacks are some of the most dangerous threats for businesses across all sectors and industries, demanding management time and increased investment in technologies like artificial intelligence (AI) to protect against vulnerabilities,” he continued. “There is no doubt that AI-focused cyber security vendors will be the most sought-after future M&A targets in this sector.”
The report also notes that cyber security transaction volume rose by 15 percent in the second-half of 2019 compared to 2H 2017. Valuations have also remained healthy, significantly above those seen in the wider enterprise software space.
