{"id":109572,"date":"2019-10-20T09:30:46","date_gmt":"2019-10-20T13:30:46","guid":{"rendered":"http:\/\/rbach.net\/index.php\/"},"modified":"2022-08-19T14:50:12","modified_gmt":"2022-08-19T18:50:12","slug":"vc-buys-sophos-start-of-bubble","status":"publish","type":"post","link":"https:\/\/rbach.net\/index.php\/vc-buys-sophos-start-of-bubble\/","title":{"rendered":"VC Buys Sophos – Start of Bubble?"},"content":{"rendered":"

Cyber-security firm Sophos<\/a>\"VC<\/a><\/strong> has been acquired by private equity firm Thoma Bravo<\/a><\/strong> for $3.9 billion. The firms disclosed the deal on Oct 14, 2019. Sophos Group (SOPH.L<\/a><\/span>) was founded in 1985 and is a FTSE<\/a> 250 company. The cybersecurity firm is based in Abingdon near Oxford<\/a> and employs 3,400 people. Sophos has 400,000 clients<\/strong> around the world including Pixar<\/a>, Ford<\/a>, Under Armour<\/a>, Northrop Grumman<\/a>, and Toshiba<\/a>.<\/p>\n

\"Sophos<\/a>The Sophos board accepted the deal and would unanimously recommend the offer from Thoma Bravo. The deal is subject to shareholder approval. Some speculate that the timing of the deal is to take advantage of the pound’s weakness around BREXIT.<\/p>\n

The deal continues Thoma Bravo\u2019s buying spree<\/strong> gathering technology companies that offer cybersecurity and business management tools<\/strong>. Thoma Bravo also has ownership stakes in cyber-security firms Barracuda Networks<\/a>, Imperva<\/a>, McAfee<\/a>, and Veracode<\/a><\/strong> and remote managing and management (RMM) firms ConnectWise<\/a>, Continuum<\/a>, SolarWinds<\/a><\/strong>, and LogRhythm<\/a>, among others. It is the first acquisition outside the U.S. for the Chicago-based buyout firm.<\/p>\n

\"Thoma<\/a>The Sophos acquisition is one of many transactions affecting the endpoint security market<\/strong>, which is consolidating<\/strong>. Rik Turner<\/a>, the principal analyst at Ovum, told<\/a> Dark Reading<\/em><\/a>, “There are probably too many vendors coming at this market in different ways, so a degree of simplification is in order.<\/em>”<\/p>\n

Among some of the notable endpoint deals thus far are VMware<\/strong>‘s acquisition of Carbon Black<\/strong><\/a>, Blackberry<\/strong>‘s purchase of Cylance<\/strong><\/a>, and HP’s acquisition of Bromium<\/strong><\/a>, for example.<\/p>\n

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\"BubbleSo the question is the cybersecurity space in a bubble<\/strong>? Have valuations and VC investments grown too rich? TechCrunch<\/em>\u00a0recently wrote<\/a>\u00a0that security may be in a bubble, but it is\u00a0not<\/em> about to burst. Here are the arguments they laid out.<\/p>\n

TechCrunch<\/em> explains the bubble part of the equation is building:<\/p>\n

The landscape of cybersecurity solutions and services is strikingly saturated<\/strong>. Still, this busy frontier continues to attract founders and investors alike, with 300+ new startups launching every year<\/strong> and VCs investing<\/strong> in cybersecurity at a record high of $5.3 billion in 2018<\/strong>. Further, many cybersecurity startups are able to raise large rounds of funding, with exceedingly high valuations<\/strong>, despite having little market traction.<\/em><\/p>\n

However, the demand side of the equation is also growing and shifting according to TechCrunch<\/em>:<\/p>\n

The global cybersecurity market is booming<\/strong>: Cybersecurity-related spending is on track to\u00a0surpass\u00a0$133 billion\u00a0in 2022<\/strong>, and the market has grown more than 30x in 13 years<\/strong>. Moreover, security is often integrated into new business initiatives and used as a competitive advantage.<\/em><\/p>\n<\/div>\n

rb-<\/strong><\/em><\/p>\n

\"The<\/a>I wonder what the looming Trump trade-war-induced recession<\/a> will do to the cyber-security bubble. We know that consolidator means job losses and recessions men more jobs are lost. To quote the great American philosopher Yogi Bera<\/a> – It’s d\u00e9j\u00e0 vu all over again for those of us who lived thru Webvan and dot-bomb<\/a>.<\/em><\/p>\n

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