Sale of companies in the cybersecurity sector

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Integral service around a transaction
BY : Diego GutiérrezDecember Mon, 2018

In our new analysis of sale of companies we are going to focus on cybersecurity. We are talking about a sector that is booming due to the increase in attacks on the Internet. The massive multiplication of data and hackers force certain companies to try to avoid losses or malicious theft. From our area of corporate finance we are going to talk about 5 companies that have been sold in 2018 in the sector and the sale operation.

1.- Cipher

Cipher is a US company founded in 2000 that is dedicated to the development of cybersecurity. It offers managed security services and security consulting, with operations in the United States, Brazil and the United Kingdom, among others. It also has a security intelligence laboratory called 'Cipher Intelligence'.

Financially, the company has an annual turnover of approximately $12 million, with a workforce of 37 employees. Their numbers and, above all, the geographic areas where they operate the business have been a step forward for Cipher.

Last Monday, 10 December, we learned about the sale of the company American to the security group Prosegur. The amounts involved in the sale are unknown, but according to the digital newspaper CincoDías, the acquired interest exceeds 60%. This is one of its biggest acquisitions of the year, which means that it is entering the world of new technologies.

The move is strategic for the Madrid-based company, as it will allow it to integrate its activities in 11 countries in North America, Latin America and Europe. Prosegur is interested in "extending its capabilities" to new geographies and consolidating operations in current markets, with a special focus on the United States, the United States, Latin America and Europe. world's largest market for cyber security activities.


2.- Cylance

Cylance (Irvine, California) is the first company to apply AI, algorithmic science and machine learning to cybersecurity. Founded in 2012, it is dedicated to improving the way businesses, governments and users proactively solve the world's toughest security problems. Using an innovative mathematical process, Cylance quickly and accurately identifies what is safe and what is a threat, not just what is blacklisted or whitelisted.

The company has raised almost 300 million to date from investors including Blackstone, DFJ, Khosla Ventures, Dell Technologies and KKR. Cylance raised $92 million last year and has offices in Ireland, the Netherlands and Japan.

Its growth in the sector and the use of AI for the development of cybersecurity has led to the sale of the company to BlackBerry. The $1.4 billion deal was confirmed on 16 November. The acquisition is BlackBerry's largest and is scheduled to close before February 2019.

BlackBerry used to be best known for smartphones with keyboards, but its demise in recent years has seen the Canadian firm turn to business services and, in particular, towards cyber-security.

 "Cylance's leadership in AI and cybersecurity will immediately complement our entire portfolio. We believe that adding Cylance's capabilities to our trusted advantages in privacy, secure mobility and integrated systems will make BlackBerry indispensable for the IoT," said BlackBerry CEO John Chen.

3.- Appthority

Appthority is a startup pioneer in enterprise mobile security and leader in the Mobile Threat Defence category (MTP), helping customers keep their data private and secure from mobile devices, applications and network threats.

The San Francisco-based company was founded in 2011, has employees worldwide and had revenues of $2.7 million in 2017. It has been meritoriously recognised by CB Insights in the ranking of "Best Companies".AI 100" as one of the most promising companies in Artificial Intelligence and its products have won several industry awards from CRN Magazine.

Its business expectations are so high that on 5 November last year, it was announced the sale of the company to Symantec. Unfortunately, the amounts involved in the whole process of the sale of the company are not known.

Founded in 1982 in California, Symantec is a leading cyber security company, helping organisations, governments and individuals protect their most important data, no matter where it resides. It operates one of the world's largest civilian cyber intelligence networks, enabling it to see and protect against the most advanced threats.

Following the purchase of the business, Symantec is now the only company that offers solutions that can protect modern and traditional endpoints (Windows, MacOS, Linux, iOS and Android) at the device, application, network, identity and cloud layers.


4.- Javelin Networks

Javelin Networks is a privately held company that offers advanced software for helping businesses defend against Active Directory-based attacks (AD). The company was founded in 2014 in Austin, Texas, with $5 million in investor funding. UpWest Labs y Hillsven Capital. In its previous financial year it accumulated $1 million in revenues and currently has employees in Israel and the US.

Microsoft developed AD as a directory service for Windows domain networks, and it is included as part of the Windows Server operating systems. Javelin's advanced technology can detect AD configuration errors and backdoors and help prevent AD misrecognition and misuse of credentials by authorised devices and applications.

Interestingly, the company was sold on 5 November to Symantec.the acquiring company mentioned in the previous section. Symantec has made dozens of acquisitions in its nearly 40-year history, but these two deals represent its first acquisitions in 2018, and more specifically in the cybersecurity sector. Again, the total deal amounts have not been made official.

Symantec is perhaps best known for its Norton security software. for consumers, but the company offers a myriad of security products and services. That's why it is integrating Javelin Networks' technology into its endpoint security business, as it promises to help "expose exploitable backdoors" in AD.


5.- Sift Security

The latest cybersecurity expert company we are going to talk about is Sift Security. This startup founded in 2014 helps to protect cloud infrastructure services such as Amazon, Microsoft or Google using machine learning.

In 2015, it received a US$3.3 million seed round of funding from the Freeman Group. It currently has a small staff of no more than 10 employees and its latest revenue figures are $3 million.

The use of machine learning has opened the door for Sift to a showcase where it has stood out from the crowd. Netskope. On 12 July the sale transaction by Sift of which terms are unknown. Sift's 10 technical employees will be part of Netskope's 500-strong team and Sift CEO Neil King will lead the advancement of the Netskope IaaS product management team.

Netskope is a company that focuses on complete website and cloud security from a single interface. It was founded in 2012 and has raised more than 231 million USD in recent years. It has also managed to accumulate a total of $400 million in various rounds of financing.

"Sift Security has strong deep learning and behavioural analytics capabilities that help with detection, correlation and response. Sift's engineers also bring valuable machine learning and anomaly detection expertise to Netskope's growing team of data scientists," said Sanjay Beri, Ceo of Netskope.

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