Spending by public corporations, private companies and government institutions on cybersecurity products and services continues to grow very rapidly.
Simultaneously, hordes of young startup companies come to market with new ideas and technologies to combat the threat with investors eagerly supporting these ventures.
Despite the best of intentions, there has not been a corresponding increase in the level of confidence CIOs and CISOs have in their ability to protect their organizations’ data.
One important reason for cybersecurity ineffectiveness is that many products are very narrow point solutions which don’t communicate and operate effectively with other vendors tools. Practitioners may receive endless streams of data and information which simply overwhelm rather than create actionable intelligence.
Insightful corporate executives increasingly recognize the benefit of providing integrated solutions to their customers. Some companies have pursued strategic partnerships, mergers, acquisitions and private equity funding in pursuit of a stronger customer value proposition.
Recent examples include:
- Symantec’s acquisition of Blue Coat for $4.7 billion, which will combine Symantec’s threat telemetry with Blue Coat’s network and cloud offerings.
- Vista Equity Partners acquisition of PING Identity for more than $600 million (approximately 6x revenue) with clear opportunity for Vista to implement its proven playbook for portfolio company add-on acquisitions.
- IBM’s acquisition of incident response software provider Resilient to gain control of a solid but narrowly focused offering that can then be integrated with IBM’s broader offerings and sold more effectively.
While deals that fail to deliver post-closing value generate headlines, many successful corporations have a core competency in mergers and acquisitions. For example, Cisco has made more than 175 acquisitions over the last 23 years, enabling CEO John Chambers to establish some basic parameters for such deals, including, “If you listen to [your customers], they’ll tell you who to acquire, they’ll tell you what you are doing right and wrong. They’ll tell you what your challenges are in the future.”
While M&A valuations paid may seem eye popping to some, the “do nothing” alternative may be far more expensive for shareholders in the long run. If a company becomes stagnant and relatively less able to meet its customers’ needs, those customers will look to the competition for help.