DENVER – The cybersecurity market reached approximately $75 billion globally in 2015, an increase of 4.7% year-over-year, according to a new study by Headwaters MB, an independent, middle-market investment banking firm based here.
Key segments included the U.S. financial services market at an estimated $9.5 billion in 2015. The U.S. federal government, which has spent $100 billion in the last decade, has budgeted $14 billion more for cybersecurity expenditures in 2016.
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Last year proved to be an extraordinary year for the cybersecurity industry as M&A transactions, IPOs and venture financings reached new heights as governments and corporations fell victim to damaging and costly data breaches, according to the report.
Titled “Cybersecurity: Finance Market Report,” the study claims:
The enormous magnitude of the information security problem leaves end users desperate for security solutions thereby driving robust demand for products and services. When a cybersecurity product or services company gains acceptance and sales traction in the marketplace, astronomical revenue growth rates and a high valuation in both dollars and as a multiple of revenues can result.
For example, in 2015 new investment firms such as Google Capital entered the sector, existing investors such as Allegis Capital increased fund sizes, and record sized financing rounds were completed for companies such as Tenable Network Security.
International finance activity remained brisk with, for example, the London Stock Exchange’s listing of the largest IPO for a cybersecurity firm in the United Kingdome and Microsoft’s acquisition of Israeli-based Adallom for $320 million.
Key conclusions from the report include:
- Red hot cyber security transaction activity globally with more than 80 M&A transactions, 4 IPOs and 377+ growth capital financings in 2015
- M&A valuations healthy with average valuation multiple for disclosed transactions of 3.0x revenue
- Robust investor demand for IPOs with average valuations of 6.7x revenue and 36.1x EBITDA
- Liquidity from M&A and IPO investor exits enticed venture capitalists to pour more than $2.3 billion into early stage financings
- Post-IPO shares of publicly traded cybersecurity firms outperforming the broader market over the last 5 years
- Plentiful growth opportunities going forward as the global cybersecurity market expected to grow to $170bn by 2020 representing a CAGR of 9.8%
To download a copy of the full report, click here.
