Contact: Scott Denne
HP’s acquisition of encryption vendor Voltage Security suggests that it’s being more disciplined on price than it had been before its M&A break. It is HP’s first security deal in four and a half years. Terms of the transaction weren’t disclosed, though encryption hasn’t garnered the high multiples that other categories of security have produced.
In the year before its reach for Autonomy shut down its M&A program, HP paid north of 10x trailing revenue on four of six purchases (and 7.7x on another). Compare those valuations with multiples in the maturing encryption space – SafeNet and Cryptzone both traded hands last year a hair below 3x trailing revenue, while earlier deals in the space, namely Symantec’s pickups of GuardianEdge and PGP, both went for 4x.
As the hangover from Autonomy fades, HP’s M&A is starting to come back online, and it has printed three acquisitions in the past 12 months. Security is likely benefiting from some M&A attention as it’s a bright spot in a declining software portfolio. In each of the past two years, HP’s enterprise software sales have ticked down a few percentage points. Security has been a growing part of that business, but could be at risk. According to a survey by TheInfoPro, a service of 451 Research, 40% of HP’s security customers anticipate spending less with that provider than they did the previous year (only Websense customers reported a higher percentage of reduced spending).
Blackstone Advisory Partners advised Voltage on its sale.
We’ll have a detailed report on this transaction in tomorrow’s 451 Market Insight.
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