BeyondTrust buys beyond its core market

Contact: Brenon Daly

Announcing its first acquisition since the September 2009 combination that created the current company, BeyondTrust recently picked up the assets of Lumigent. The deal adds Lumigent’s database monitoring to BeyondTrust’s core privileged identity management platform, so the purchase is a fairly logical step into an adjacent market. Terms weren’t disclosed, but we would guess that Lumigent didn’t sell for much more than the $4m of revenue that it generated last year. The company had been struggling in part because of a strategic misstep two years ago to go into the market for application governance, risk and compliance.

BeyondTrust paid for the Lumigent acquisition from its own treasury, even though it does have Insight Venture Partners as a backer. And the company is not done buying. We understand that it is likely to announce another two acquisitions this year. BeyondTrust can afford to do deals because it generates a fair amount of cash, running at a 35% EBITDA margin. The company recorded revenue of some $40m last year, up from $32m in 2009. Assuming those transactions go through, we gather that roughly half of the growth at BeyondTrust for 2011 would come organically, with the remaining half coming through M&A.