Contact: Brenon Daly
What happens at the top end of a market usually goes some distance toward setting the overall tone in that particular market. At least that’s one way to view M&A in the information security sector, which has surged to a record level of spending led by transactions involving the two largest vendors. Up until recently, both Symantec and McAfee had been largely out of the market as the companies worked through earlier strategy bets that didn’t pay off.
So far this year, infosec shoppers have spent $14.3bn on deals, according to 451 Research’s M&A KnowledgeBase. That tops the previous record of $13.5bn in 2010. However, a look inside the deal flow indicates that the previous record was much more concentrated: the single-largest transaction in 2010 (Intel’s $7.7bn purchase of McAfee) accounted for more than half of that year’s overall deal value, while the single-largest transaction in 2016 (Symantec’s $4.7bn pickup of Blue Coat Systems) accounts for just one-third of this year’s spending.
Intel’s partial unwind of its experiment with McAfee is contributing to this year’s record. But more dramatically, it’s the reversal at Symantec that has boosted overall spending in the infosec space. After shying away from significant acquisitions in recent years, Big Yellow has now inked its two largest security deals in just the past the past five months. For perspective, the combined $7bn Symantec has shelled out since last summer for Blue Coat and LifeLock is more than it has spent, collectively, on its 25 other infosec purchases since 2002, according to the M&A KnowledgeBase.
In addition to large corporate buyers, big financial acquirers have also been contributing to this year’s record spending. Both TPG Capital’s carve-out of McAfee and PE-backed AVAST’s consolidation of AVG were valued in the billions of dollars. For comparison, the previous record year of 2010 didn’t feature any billion-dollar PE transactions.
