03 Mar Under Pressure, Cybersecurity Market Is Ripe for M&A in 2016
Cybersecurity, in recent years among the strongest segments of the tech sector, now is feeling the effects of the downturn.
Over the last two years, investors have poured capital into private security companies. Twelve security companies have raised more than $100 million each from venture capitalists, according to Dow Jones VentureSource. It’s fitting that the industry’s largest annual conference, which started Monday in San Francisco, is held just two blocks from the former sand dunes where Gold Rush-era prospectors encamped in an area known as Happy Valley.
At the RSA Conference this year, the mood may not be quite as happy. Along with the broader tech market, the cybersecurity sector has cooled. One basket of cybersecurity stocks, an exchange traded fund called HACK that trades like a stock, is down more than 30% since June 2015 compared to an 11% decline in the NASDAQ NDAQ -0.50% composite index during the same period. Private companies have put IPO plans on the back burner. Instead, many venture capitalists and investment bankers expect 2016 to be a year of mergers and acquisitions for some companies. For other companies it will be the death knell, say experts. . .
Exabeam and Fortscale, among several potential targets cited, specialize in identifying authorized users based on their typical behavior as they use software and websites.
Exabeam did not respond to a request for comment.
“We didn’t build Fortscale to be acquired, but we certainly appreciate the increased attention, resources and brainpower that’s being brought to bear to a security space that we’ve always thought of as pivotal,” said Fortscale CEO Idan Tendler in an email.
Read the complete article at The Wall Street Journal.
