October 12, 2023 at 09:59AM
In Q3 2023, Cisco’s acquisition of Splunk for $28 billion was a major highlight in the cybersecurity industry. Other vendors made strategic purchases to position themselves in emerging security segments. The quarter also saw a revival in IPO activity and an increase in venture funding. The security segments experiencing the most activity included services, consulting, application GRC, security operations, and identity and access management. The industry continues to consolidate as big players acquire smaller companies. The managed security services market and cloud security and compliance sectors are expected to see further consolidation. Investment activity rebounded after the disruption caused by the collapse of Silicon Valley Bank earlier in the year. Venture funding in cybersecurity is predicted to reach $10 billion in 2023. Notable investments in Q3 included Cato Networks raising $238 million and OneTrust raising $150 million. Some companies, like Cato Networks and Rubrik, are rumored to be considering IPOs in 2024.
Key Takeaways from the Meeting Notes:
1. Cisco’s $28 billion acquisition of Splunk in September was the major financial highlight of the quarter. Several other vendors also made strategic purchases in the security industry.
2. The acquisitions were made to position companies for emerging enterprise requirements around cloud, application, and identity security.
3. The security industry witnessed a consolidation trend as big players acquired smaller players and smaller players sought profitable exits.
4. Reasonable valuations drove acquisition interest in the cybersecurity sector, with venture capital firms looking for quicker exits.
5. Cisco’s acquisition of Splunk established the company as a player in the next generation SIEM market.
6. Other prominent acquisitions in the security industry included CrowdStrike’s purchase of Bionic, Check Point’s acquisition of Perimeter 81, Thales’ acquisition of Imperva, and Tenable’s acquisition of Ermetic.
7. The managed security services market garnered considerable interest from acquisition hunters, and more activity is expected in this segment.
8. Cloud security and compliance sectors show potential for consolidation, as they are crowded with emerging companies.
9. Momentum Cyber recorded 63 M&A deals in Q3 2023, with a total disclosed value of $34.9 billion, indicating increased deal volume.
10. Venture funding in the cybersecurity sector is anticipated to reach $10 billion in 2023, rebounding from the disruption caused by Silicon Valley Bank’s collapse.
11. The GRC segment attracted the most investments in the cybersecurity sector, while API security and email security received smaller investments.
12. Significant investments in the third quarter included Cato Networks, OneTrust, SpyCloud, Resilience, and Nord Security.
13. Companies like Palo Alto Networks, CrowdStrike, and Zscaler have shown strong performance on Wall Street.
14. IPO rumors are circulating, with Cato Networks and Rubrik rumored to be considering going public in 2024.
Overall, the security industry is experiencing consolidation through acquisitions, driven by emerging enterprise requirements and reasonable valuations. Venture funding is rebounding, and there are signs of increased activity and potential IPOs in the future.