Impact of Covid19 on Cybersecurity Mergers And Acquisitions

1
Impact of Covid19 on Cybersecurity Mergers And
Acquisitions
2
The Content
The Importance of Cybersecurity in the Era of
Covid 19
01
Cybersecurity MA Deal Volume in 2020
02
The Conclusion
03
Cybersecurity MA Deal Volume in 2021
04
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Impact Of Covid19 On Cybersecurity Mergers And
Acquisitions

• The COVID-19 crisis has impacted almost every
  economic sector, affecting millions of jobs and
  livelihoods of people employed in that industry.
  With respect to business continuity,
  organizations around the world had to make a
  rapid shift to work-from-home (WFH) model a
  move that has become the new normal for global
  businesses and enterprises.

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Impact Of Covid19 On Cybersecurity Mergers And
Acquisitions

• However, to be clear, while many companies have
  positively embraced the idea of remote working,
  security has been a major issue since the WFH
  model was introduced. Consequently, there is one
  industry that faced very little impact due to the
  pandemic and i.e., the global cybersecurity
  industry.

Before we move on to understanding the impact of
Covid-19 on cybersecurity mergers and
acquisitions (MA), its important to understand
why cybersecurity is now more important than ever.
5
The Importance of Cybersecurity in the Era of
Covid 19
6
The Importance of Cybersecurity in the Era of
Covid 19

• Prior to this pandemic, businesses relied heavily
  on traditional physical communications.
  Face-to-face meetings, chats over coffee, and
  business conferences all formed an important part
  of the corporate culture.

• The full sales cycle, from lead generation to
  closing the deal, was easier as there were
  physical interactions between parties. It was
  easier for the in-house IT team as well to manage
  the interactions of those few field employees
  working remotely.

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The Importance of Cybersecurity in the Era of
Covid 19

• The current situation, however, has made it
  challenging for organizations to support remote
  workers on such a large scale, exposing both the
  workers and the organizations to a range of
  cybersecurity risks. Moreover, in an all-virtual
  environment, managing customer relationships is
  another big challenge.

More robust cybersecurity measures, therefore,
need to be adopted to allow for the safe
transmission of sensitive data back and forth
between all parties, including buyers, brokers,
acquirers, and regulators, and to facilitate
negotiations and due diligence in a virtual
world.
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The Importance of Cybersecurity in the Era of
Covid 19

• In light of these extraordinary times, where
  cybersecurity is a priority of all businesses,
  some companies have taken an opportunistic
  approach to accelerate their economic recovery
  and fuel their growth with cybersecurity mergers
  and acquisitions.

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Cybersecurity MA Deal Volume in 2020
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Cybersecurity MA Deal Volume in 2020
The year 2020 was difficult for the mergers and
acquisitions industry as well. The global MA
market slowed down during the pandemic as
organizations were adjusting to changing market
conditions.
According to the World Investment Report 2020,
when the COVID-19 crisis was announced in April
2020, the global volume of MA deals experienced
a drop of more than 50 from March and more than
40 from the monthly average in 2019. In total,
the value of global MA deals in 2020 amounted to
US2.8 trillion, a sharp decline from US3.4
trillion in the previous year.
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Cybersecurity MA Deal Volume in 2020
Some deals were even abandoned as they were no
longer feasible or desirable due to
pandemic-related factors. While the MA deals
slowed down significantly, it never came to a
complete halt. There were some notable MA
transactions that made headlines during the
pandemic as well.
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Cybersecurity MA Deal Volume in 2020
Especially, mergers and acquisitions in the
cybersecurity space showed a decent momentum as
the changing business situations called for an
intense need to quickly adapt to the new
normal.
For example, on April 21, 2020, Palo Alto
Networks acquired CloudGenix, cloud-delivered
SD-WAN provider, in order to strengthen its
comprehensive secure access service edge (SASE)
platform. The same month, Accenture acquired
Symantecs Cyber Security Services business from
Broadcom Inc. in an effort to add to its ability
to help organizations foresee, detect, and
respond to cyber vulnerabilities. On Sep 1, 2020,
private equity firm Symphony Technology Group
(STG) acquired RSA, a network security company,
from Dell Technologies, allowing RSS to gain new
status as an independent company dedicated to
helping organizations manage cybersecurity risks.
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Cybersecurity MA Deal Volume in 2020
According to a Capstone Partners report, despite
a slowdown in the broader MA markets,
cybersecurity merger and acquisition (MA)
activity in 2020 outperformed all other
industries, with deals volume increasing 33
year-over-year.
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Cybersecurity MA Deal Volume in 2021
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Cybersecurity MA Deal Volume in 2021
Although the situation is gradually getting back
to normal, many companies are still working in an
all-virtual environment. And many key industry
players are planning to adopt a hybrid virtual
model a combination of remote and on-site
working.
In both situations, the effective use of new and
creative collaborative tools, technologies and
techniques, without compromising privacy and
security, has become more critical than ever. In
response to this need, there is a group of
companies that have seen cybersecurity-related
MA as an opportunity to stimulate their growth
in a slowing economy and solidify their position
in the market. This is evident from the fact that
following the 2020 decline, cybersecurity mergers
and acquisitions again started to heat up at the
beginning of 2021.
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Cybersecurity MA Deal Volume in 2021
In March alone, more than 40 acquisitions took
place and nearly 40 cybersecurity MA deals were
announced in July 2021. In many cases, the goal
of the acquisition was to strengthen its
footprint in the market.
For example, Sophos acquires Capsule8, a market
leader of runtime visibility, detection and
response for Linux production servers and
containers, to expand its own portfolio of
detection and response solutions for
under-protected server and cloud environments.
SIEM and cloud monitoring vendor Sumo Logics
acquisition of DFLabs adds to its security
orchestration, automation, and response (SOAR)
capabilities.
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Cybersecurity MA Deal Volume in 2021
In 2021, many companies have made - and are still
making - conscious efforts to use mergers and
acquisitions to quickly supplement their existing
security solutions. Especially, larger tech
players, such as Palo Alto Networks, Deloitte,
VMWare, Microsoft, Ivanti, and Accenture have
emerged as serial acquirers. This shows the
cautious optimism of companies towards
cybersecurity MA, even in times of uncertainty.
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The Conclusion
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The Conclusion
The COVID-19 pandemic certainly had a huge impact
on businesses, with thousands of companies have
permanently closed their doors or cut back their
operations significantly in response to falling
customer demand, and millions of workers have
been laid off or put on furlough. Despite this,
the cybersecurity MA industry has been able to
recover in a very short period time, which is
quite impressive. With subsequent waves of
COVID-19 still impacting countries in varying
magnitudes, it would be interesting to see how
different companies try to stay competitive using
cybersecurity MA as a business growth strategy.