Magnet Forensics sold to Thoma Bravo for $1.3bn

April 2023 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

April 2023 Issue

In a deal which expands its cyber security reach, US private equity and growth capital firm Thoma Bravo is to acquire Canadian digital forensic software company Magnet Forensics for $1.3bn.

Under the terms of the definitive agreement, Thoma Bravo will offer C$44.25 per share based on Magnet’s Toronto Stock Exchange closing price on 19 January 2023. Upon completion of the transaction, Magnet will become a privately held company.

Founded in 2010, Magnet is a developer of digital investigation software that acquires, analyses, reports on and manages evidence from digital sources, including computers, mobile devices, internet of things devices and cloud services. The company’s software is used by more than 4000 public and private sector customers in over 100 countries and helps investigators fight crime, protect assets and guard national security.

Following the closing of the transaction, Thoma Bravo intends to combine Magnet with Grayshift LLC – a provider of mobile device digital forensics, specialising in lawful access and extraction – which it acquired majority control of in July 2022.

“We believe the combination of Magnet and Grayshift will unlock tremendous value for our customers,” said Adam Belsher, chief executive of Magnet. “Further integrating and expanding our product suite will result in more seamless workflows in the recovery and analysis of critical digital evidence to investigations and ultimately contribute to our shared mission of the pursuit of justice.”

By combining Grayshift’s mobile access and extraction capabilities with Magnet’s digital investigation suite, customers are expected to be able to leverage the platform to extract, process, examine, collaborate on and manage digital forensic evidence.

“Since early in Grayshift’s history, Magnet Forensics has been a trusted and strategic partner,” said David Miles, co-founder and chief executive of Grayshift. “Bringing Magnet and Grayshift together will accelerate innovation and ultimately transform digital investigations. This is a defining moment in the industry, and together we will accelerate the future of digital forensics.”

The companies’ complementary offerings are expected to create a powerful end to end digital investigations platform empowering more public safety agencies around the world to seek justice, solve crimes and protect victims.

“We look forward to bringing together the complementary capabilities of Magnet and Grayshift to create a leader in the digital forensics and cyber security space,” said Hudson Smith, a partner at Thoma Bravo. “Digital evidence is an increasingly critical aspect of investigations, and the combined company will be well-positioned to further market expansion, accelerate innovation and provide even greater solutions to its customers.”

A serial acquirer, Thoma Bravo invests in growth-oriented, innovative companies operating in the software and technology sectors. Leveraging deep sector expertise and strategic and operational capabilities, the firm collaborates with its portfolio companies to implement operating best practices and drive growth initiatives.

Acting as legal adviser to Thoma Bravo is Kirkland & Ellis LLP, with McMillan LLP acting as Canadian legal adviser.

Assuming the timely receipt of all required approvals, the transaction is expected to close by the second quarter of 2023.

Mr Belsher concluded: “We are confident that this transaction – joining two complementary organisations to form a new private company – offers the most compelling value creation for all our stakeholders and is a testament to the value of digital investigation solutions, the Magnet platform, our talented team and loyal customer base.”

Fraser Tennant