January Cyber Intelligence Review

Ending a year that witnessed several high-profile cybersecurity breaches, December saw two of the year’s largest.  National retailer Target Corp. reported  a breach of it users’  credit and debit card data that affected approximately  40 million accounts, with the perpetrators gaining access to card numbers and encrypted PIN data.  Additionally, 4.6 million user names and associated mobile phone numbers were stolen and partially published online, in association with social communication company Snapchat.

December was a strong month for IT security M&A.  Identity-based security solution provider Entrust was acquired by Datacard Group for $500 million, at an EV / EBITDA multiple of ~4.17x. The combination of Datacard’s personalized card and secure identification solutions with Entrust’s digital identity capabilities is expected to create an integrated platform of physical and digital security solutions that will reduce complexity for customers’ identification ecosystem.  Additionally, Akamai Technologies acquired Prolexic Technologies, a provider of cloud-based distributed denial of service (“DDoS”) protection solutions, for $370 million, in order to expand its portfolio of network security solutions.

IT security companies also experienced a robust market for VC funding in December.  Fundings for the month reached $130 million, bringing total YTD funding to $1.2 billion.    Mobile device security developer Mocana raised $15 million in a Series E funding round that will be used to further develop security technologies aimed at protecting the growing number of sensor-embedded, network-enabled devices, commonly referred to as the “Internet of Things.”  AlienVault, a provider of open source tools for vulnerability assessment and security intelligence, raised $30 million in a Series D funding round  in an effort to scale  its  global sales and marketing  initiatives.  The Big Data market also made funding headlines with Palantir’s $107.5 million Series I round that implied a valuation of approximately $9 billion for the CIAbacked data analytics firm.

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June Cyber Intelligence Review

The month of May featured several cybersecurity headlines, in addition to many M&A and venture capital (“VC”) transactions.  A confidential report prepared by the Defense Science Board  listed advanced weapon system designs,  such as those of the Patriot missile and Aegis ballistic missile, that have been compromised by Chinese cyberspies.  Amidst frequent and high-profile cyber breaches in both the government and private sector,  VCs  invested  about  $350 million into IT security deals in 1Q13, up 90%  over  1Q12[1]. On the Big Data front, President Obama signed an executive order that mandated all  legally-permissible  federal data be made publicly accessible in machine-readable format.

On the M&A front, Blue Coat Systems (a portfolio company of Thoma Bravo)  acquired Solera Networks, a provider of  security analytics and forensics  solutions;  Vista Equity Partners  purchased  publicly-traded Websense, a provider of web, email, and data security solutions, for  nearly  $1 billion; and  Haystax Technology acquired FlexPoint Technology, a provider of security services and cloud computing solutions. In VC funding news,  Digital Signal Corporation, a provider of 3D  long-range facial recognition solutions for government and commercial clients,  raised a $50 million Series D round to expand sales, distribution, and manufacturing.  AirWatch, a provider of  mobile security and mobility management solutions, raised  another $25 million to extend its Series A round  from  February 2013  to a total of $225  million.  Finally, Cloudant, a provider of  data hosting and analytics solutions, raised  a  $12 million Series B  round  to  support global expansion and grow support, service, and go-to-market strategies.


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July Cyber Intelligence Review

June was another exciting month for Cyber / Intelligence activity with several notable acquisitions and continued strong investment by venture capitalist funds.  In the headlines, national security remains a focal point of investment and is stimulating a demand for cybersecurity legislation.

Northrop Grumman announced its first acquisition since late 2008 with the purchase of M5 Networks.  The deal was primarily driven by the strong customer relationships held by M5 with foreign military and intelligence organizations, which provides Northrop Grumman with customer diversification in the face of dwindling U.S. federal budgets.

DARPA awarded a multi-year, $21.4 million contract to security start-up Invincea, to secure Android-based mobile operating system devices through a program known as Mobile Armor.  Moreover, former military and Intelligence Community leaders drafted a letter urging the passage of cybersecurity legislation that will offer protections for critical infrastructure.

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