McAfee is back in the news again. The often sold antivirus vendor is selling its enterprise security business. McAfee and private equity firm Symphony Technology Group (STG) announced on 03/08/2021 that the PE is buying McAfee’s enterprise security business for $4.0 billion in an all-cash deal. The deal is expected to close before 2022. McAfee is keeping its consumer security software business.
Selling its enterprise security business
The McAfee website touts that the enterprise business serves 86% of the Fortune 100 firms, and generated $1.3 billion in net revenue in the fiscal year 2020. Despite these numbers, it is clear why McAfee is selling its enterprise security business. For FY2020 the company reported $2.9 billion in total revenue, up 10% YoY. Techcrunch says the overall revenue broke down to $1.6 billion from the consumer side. The enterprise side brought in $1.3 billion in net revenue, an increase of just 1%.
Increased competition
One of the reasons McAfee is selling its enterprise security business is increased competition. McAfee’s enterprise business has struggled in recent years against fast-growing endpoint detection and response (EDR) software companies — such as CrowdStrike and SentinelOne. CrowdStrike’s revenue was up 86% YoY in 21Q3. SentinelOne is preparing an IPO that could achieve a $10 billion valuation. Also, major technology companies such as Cisco Systems, Microsoft, and VMware’s Carbon Black have pushed deeper into McAfee’s market space.
We have seen this before
After the sale of the enterprise security business, it will re-branded. Once the deal closes, the McAfee consumer business will be known as McAfee. The STG-McAfee deal is similar to Symantec’s breakup. As I wrote about in 2019, Broadcom acquired Symantec’s enterprise security business for $10.7 billion. Symantec’s consumer business, now known as NortonLifeLock, remains publicly traded.
Legacy Synergy
STG’s purchase of McAfee’s enterprise security business should pair well with another STG enterprise-focused security holding. The PE firm purchased RSA from Dell last February for $2 billion. STG did not point directly to the RSA acquisition, the two investments create a large combined legacy security business for the firm. Both firms have strong brand recognition but have lost some of their edge to more modern competitors in the marketplace.
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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.