Contact: Scott Denne Javvad Malik
Firewall management companies began to crop up a decade ago to help organizations tackle firewall sprawl, but that corner of the security market has seen few acquisitions, despite its age. Now that all the vendors in that space are expanding beyond pure firewall management, we expect a few of the five vendors here – FireMon, Skybox Security, RedSeal Networks, AlgoSec and Tufin – to take advantage of high valuations among security companies and look for an exit. While the category continues to grow modestly, none of these vendors has emerged as the clear leader, with most hovering around $25m in annual sales.
In trying to stand out from the crowd, they’ve all expanded in recent years beyond firewall management and into adjacent areas such as network risk assessment and network orchestration. As pure firewall management vendors, there was little interest in buying them: their sales came from being positioned as a neutral party with the ability to manage products from different security vendors. Getting picked up by a large security vendor could put that position in jeopardy.
Over the last 12 months, security companies have sold at a median valuation of 8.3x trailing revenue, according to the 451 M&A KnowledgeBase. Many may still be stymied, however, by a perception that they’re still primarily firewall management vendors, thereby affecting their valuation potential.
We explore this sector in depth in a report here.
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