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Advanced Cyber Threats Drive Momentum in Government Technology M&A

As cybersecurity threats become increasingly complex, top government officials are prioritizing investment in technologies that more accurately detect, respond to, and protect against breaches. Public sector organizations are consistently looking for best practices and open dialogue to combat the next generation of threats, and are focused on procuring technologies and services to manage critical cyber infrastructure.

Recognizing the continued opportunity in cybersecurity, several government contractors have responded by aligning their capabilities with agency needs in order to better position them for potentially sizeable funding in a growth-oriented pocket of Federal IT. While some contractors have formed partnerships with commercially-oriented firms, as Booz Allen Hamilton has done with Splunk, acquisitions continue to be a preferred route for quickly acquiring the necessary capabilities to compete for Federal cybersecurity procurements.  Thales recently announced its $400 million acquisition of Vormetric, expanding Thales’ security offerings to include data protection solutions in physical, virtual, and cloud infrastructures.  Raytheon, who acquired a majority stake in commercial cybersecurity firm, Websense, earlier this year, announced the acquisition of Foreground Security in early October.  Foreground’s array of advanced cyber capabilities, such as continuous security monitoring and threat hunting, were touted as immediate accelerators to Raytheon’s existing cybersecurity business, particularly as an entry point into some of the more rapidly growing segments of the cybersecurity market.  Accenture acquired FusionX in August, highlighting FusionX’s cyber-attack modeling and simulation services as key technologies in giving clients the ability to protect against and respond to even the most advanced threats.

With the complexity of threats continuing to grow, government will be looking for increasingly advanced technologies to procure. As contractors attempt to meet that demand, companies with high-end cyber capabilities and expertise may be prime near-term targets for those looking to secure additional funding from Federal agencies.  With 19 cyber-related deals in the government technology arena announced thus far in 2015, the momentum in this sector does not appear to be fading anytime soon.