Jun 12, 2016 - Advanced web and cloud security ... +. Network. Security. Cloud. Respond Rapidly to. Security Incidents.
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acquires
A Closer Look At The Second Largest Cybersecurity M&A Transaction In History Advisors & Dealmakers In Cybersecurity.
Momentum Partners, LLC
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Symantec Acquires Blue Coat In Second Largest Cybersecurity Transaction Symantec Not Only Acquires Blue Coat, Acquires CEO In A $4.65B All Cash Deal. Transaction Overview
Blue Coat Overview 6/12/2016
Date: EV / LTM Rev:
7.8x
EV / LTM EBITDA:
NM
Acquires
HQ: Sunnyvale, CA // Founded: 1996 CEO: Greg Clark (Now CEO of Symantec) Customers: 15,000
Network
Security
+
Private Equity Support:
In December 2011, Thoma Bravo acquired Blue Coat and took company private for $1.3B. In March 2015, Bain Capital acquired Blue Coat from Thoma Bravo for $2.4B.
Platform Capabilities
Cloud
+
Protect Cloud and OnPremise Assets
Protects enterprises and its users from cyber threats
Enterprise Security
$4.65 Billion
§ § §
Advanced web and cloud security Encrypted traffic management Network performance and optimization
§ Silver Lake makes an additional $500M investment into Symantec (doubling their investment to $1B) § Bain Capital to reinvest $750M to help fund the deal § Additional $2.8B raised in the form of debt for acquisition Source: Company press releases and websites, 451 Research.
Defend Against Advanced Threats
Manage Encrypted Traffic
Optimize Network Performance
Leverage Cloud to Protect the Cloud
Top 5 Cybersecurity Transactions by Value
Transaction Funding § Symantec acquires Blue Coat for $4.65B in an all cash deal
Respond Rapidly to Security Incidents
Date Announced
Deal Value ($B)
EV / LTM Rev
August 19, 2010
$7.7
3.4x
June 12, 2016
$4.7
7.8x
February 9, 2004
$4.0
14.3x
July 23, 2013
$2.7
10.7x
March 10, 2015
$2.4
3.8x
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Acquirer
Target
The Market Continues To Value Scale, Predictability, & Profitability Symantec’s Acquisition of Blue Coat Is A Prime Example. 9.0x Proofpoint $2,631 mn
Check Point $14,461 mn
8.0x
EV / Revenue 2016E
Palo Alto Networks $11,670 mn
CyberArk $1,527 mn
$3,073 mn(1)
7.0x
Splunk $7,526 mn
6.0x Fortinet $5,794 mn
Qualys $1,121 mn
5.0x
Imperva $1,260 mn
4.0x AVG $989 mn
3.0x
Barracuda $774 mn
Trend Micro $4,695 mn
F-secure $466 mn
2.0x MobileIron $273 mn
1.0x
Imprivata $349 mn
FireEye $2,567 mn
Mimecast $582 mn
Rapid7 $588 mn
R2 By Quarter Current: 22.2% Q4: 29.2% Q3: 63.2%
Q2: 68.4%
0.0x 0%
5%
10%
15%
20%
25%
2015-16E Revenue Growth High Growth Cybersecurity
Low Growth Cybersecurity
(1) Note: Size of the bubble indicates Market Cap (Equity value in the case of Blue Coat). In USD; Market data as of June 15, 2016. Source: Capital IQ.
2
30%
35%
40%
Strategic Moves For Competitive Advantage Accelerating The Landscape Of Buyers For Cybersecurity Companies Has Expanded Over Time. Notable Deals By Sector
Cybersecurity
IT
IT
PE
Defense
Industrial
ISP
Defense
1/16: $275M / 6.9x
11/15: $280M / NA
10/15: $400M / 7.5x
11/15: $78M / NA
10/15: $71M / NA
4/15: $1.9B / NA
10/15: $453M / NA
7/15: $190M / NA
10/14: $233M / 3.0x
Industrial / IoT
ISP
PE
1/16: NA / NA
10/15: $9M / NA
8/15: NA / NA
7/15: NA / NA
4/15: $200M / 3.3x
Most Active Acquirers 12/14: $710M / 6.0x
7/14: NA / NA
Source: Momentum Partners.
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4/15: $786M / 3.6x
3/15: $2.4B / NA
Cybersecurity M&A: A Closer Look At Deal Value & Multiples The Combination of Blue Coat’s Deal Value & Valuation Multiple Are ‘Rare Air.’ M&A By Deal Size
M&A By Valuation Multiples (EV / LTM Rev)
55%
35%
48%
50%
30% 30%
45%
85
40%
27%
26%
25%
35% 30%
18% 24
Median Deal Size For >10x
$247M
25%
27
24
20%
15%
20%
16
16% 13%
15% 10%
10%
11%
29 23
19
5%
7%
6%
12
11
22 5%
11
0% >$0M - $50M
$50M - $100M
$100M - $250M
$250M - $500M
$500M - $1B
0%
$1B+
§
The median exit enterprise value for Cybersecurity exits since 2010 is $65M
§
M&A exits in Cybersecurity are typically below $100M – 60%+ of the time
§
Exits above $1B are quite rare representing 6% of all deals (3 public, 6 private and 2 spin-out)
§
Contemplated transactions are increasingly falling into two categories:
>0.0 - 3.0x
§ §
5.0x - 10.0x
10.0x+
Valuations for M&A exits in Cybersecurity vary for many reasons – growth, market leadership, scale, customer validation, technology and team Exits >10x are a small minority (18%) where the buyers are typically ‘cash rich’ and willing to pay ‘what it takes’ (median cash balance of the buyers at time of acquisition was $2.2B and median market cap was $17.9B)
§ Transformational (a la Symantec/Blue Coat)
Buyers
§ Opportunistic (rationalizing valuation and cooling funding markets) Source: Momentum Partners, 451 Research, Capital IQ.
3.0x - 5.0x
4
The Security M&A Chessboard Major Moves Will Be Made Post Symantec / Blue Coat. The Top Targets (2016E Revenue $M)
The Top Consolidators (Cash Balance $B) $105.3
$793.6
$63.5
$501.0 $425.3
$56.1
$336.8
$15.3
$303.6
$14.9
$211.0
$9.0
$197.8
$6.0 $2.8
§ All considered IPO candidates (> $75M in Revenue)
$1.4
§ Each likely seeking $1B+ exit
$1.1
Network/Endpoint Security MSSP Web Security Application Security IAM Vulnerability Management Cloud Security Application Security IAM Advanced Endpoint Security
§ Backed by Vista Equity (Fund V: $5.7B) & Raytheon ($2.6B Cash)
The Wild Cards
Source: Momentum Partners.
Advanced Endpoint Security
The Wild Cards
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CYBERscape: The Cybersecurity Landscape The Security Sector Is Dynamic And Vast. Infrastructure Security
Endpoint Security
Application Security
Network Firewall
Network Monitoring
Endpoint Prevention
WAF & Application Security
Intrusion Prevention Systems
Unified Threat Management
Endpoint Detection & Response
Vulnerability Assessment
Messaging Security
Web Security
Managed Security Service Provider
Industrial / IoT Security
Security Operations & Incident Response
Threat Intelligence
Mobile Security
Data Security
SIEM
Cloud Security
Security Incident Response Specialized Threat Analysis & Protection
Transaction Security
Risk & Compliance
Source: Momentum Partners.
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Identity & Access Management
15
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Momentum Partners, L L C Momentum Capital Markets, LLC 340 Brannan Street | Suite 501 San Francisco, California 94107 Michael Tedesco Executive Chairman
[email protected]
Eric McAlpine Managing Partner
[email protected]
Petros Kitsos Senior Advisor
[email protected]
Timothy Lipton Partner
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Keith Skirbe Director
[email protected]
*Securities offered through Momentum Capital Markets, LLC, a division of Financial Telesis Inc. Member FINRA/SIPC.
Dino Boukouris Director
[email protected] 