Security sector ripe for M&A

Contact: Ben Kolada

Thousands of security executives, bankers and investors descended on San Francisco last week for the annual RSA and America’s Growth Capital West Coast Information Security & Emerging Growth conferences. (Many of them also joined us at our executive-only breakfast last week.) Nearly 700 companies exhibited at the two conferences, and after speaking with many of these companies we walked away convinced that the number of M&A opportunities in enterprise security seem as large as ever.

Many of these companies saw explosive growth in 2011, and the forecasts are equally bullish for this year. One such company is network security analytics startup Solera Networks. Following RSA last year, we predicted that NetWitness would soon sell – we were right. This year, we expect NetWitness rival Solera to get some acquisition attention. We hear that the company generated just under $10m in sales last year, but is growing quickly. Although Solera’s current revenue is much smaller than what NetWitness generated in the year before its sale, we wouldn’t be surprised if its investors expect a comparable valuation. Including a recent $20m series D funding round secured in January, Solera’s investors have collectively put $51m into the company. NetWitness, on the other hand, had taken in just about $20m before its sale.

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