Contact: Scott Denne Scott Crawford
FireEye acquires iSIGHT Partners as it seeks to differentiate its security platform among its high-end customers. The purchase expands FireEye’s presence in the threat intelligence market – an extremely fragmented space that caters to deep-pocketed customers due to the high cost of putting together threat intel.
Despite that narrow appeal, FireEye is bullish on the category. The $200m price tag is the highest we’ve seen for a pure-play threat intelligence firm (FireEye also included a $75m half-stock, half-cash earnout in the deal). That’s not to say there haven’t been notable transactions here. Last year, LookingGlass paid $35m for QinetiQ’s Cyveillance unit; Proofpoint nabbed Emerging Threats for $40m; and Cisco paid a bit more than that for ThreatGRID.
Multiples in threat intelligence transactions have varied. LookingGlass paid less than 2x trailing revenue for its acquisition, while Proofpoint likely paid closer to 10x – Emerging Threats had just 30 employees at the time of its exit. FireEye’s purchase values iSIGHT at 5x, making it the lowest multiple we’ve seen FireEye pay in its life as a public company. Considering that FireEye itself now trades at just over 3x, following a 67% decline in the past six months, its pickup of iSIGHT shows that it’s still willing to stretch a bit for a deal. Though maybe not as much as it did with its $1bn all-stock acquisition of Mandiant at the end of 2013.
Aside from the price tag, there are some parallels between today’s deal and the Mandiant buy. At the time of the earlier transaction, FireEye emphasized the complementary nature of automated insights gained via tech and the need for human research and response. The acquisition of iSIGHT extends that rationale and the target has already made an investment in integrating threat intelligence with technology.
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