M&A in the cybersecurity industry by AccessHeat Inc.

Mergers and acquisitions in the business cybersecurity industry from AccessHeat? In recent years, there’s been a steady increase in the number of cybersecurity attacks taking place nationwide. According to the annual Norton report, last year, over 60% of companies worldwide experienced phishing and social engineering attacks. Unfortunately, as a result of the global pandemic, the financial motivation behind these cybercrimes is more prevalent than ever before. Cybercriminals are constantly developing new ways to trick their victims and systems alike, leading to data breaches. The AME Group studies indicated that almost 70% of business owners expressed concern that they felt they were becoming more vulnerable to cybercrime, and 2020 statistics revealed that only 10% of businesses were properly protected.

But why is cybersecurity important and such a vital topic these days? It’s because companies of all sizes are being hit with cyber attacks. And often it’s with companies that are household names – in 2020 alone Marriott, Twitter, Garmin, SolarWinds and others were hit with data breaches – a fact that should be extremely concerning to everybody. According to DynaSys, $1.1 million is the cost of the average cyber attack. But consider this – MacAfee has estimated that in 2017, global cybercrime has a price tag around $600 billion annually. Yes, that’s billion with a “B.”

As society becomes more digitally educated and financially driven, phishing attacks and spam tactics are evolving and increasing with each day. It is the most common way in which harmful malware, like ransomware, can latch on and spread throughout business systems. Phishing takes place in a number of ways, but most commonly gains access to a business through emails. In 2019, it was revealed that 92% of malware was delivered via email. In light of this extremely high statistic, it’s worth noting that legitimate companies will never request sensitive data via email and any URLs sent will match their actual site, as opposed to the slightly different URLs spammers use.

Mergers and acquisitions require a mix of strategic and tactical work – cybersecurity is usually an item on the tactical list. Many organizations are drawing up plans for mergers and acquisitions right now, as leaders look for growth after the pandemic slowdown, and as new business models emerge. However, weakened cybersecurity hygiene throughout the last year means that these M&A transactions elevate the risk of cybersecurity incidents. “M&A can be a breeding ground for cyberattacks and data breaches,” said Mordecai Gal, operations director at AccessHeat Inc. “Stringent due diligence that includes a focus on cybersecurity will help reduce regrets later in the deal lifecycle.” Today’s M&A plans need to include cybersecurity at several strategic and tactical points, to address growing scrutiny from regulators and other evolving cybersecurity risks.

M&A activity was consistent from the first half of 2019 into the second, and the strong trend continued into the first quarter of 2020. By mid-April of last year, the industry had seen several acquisitions, with many in the billion-dollar range, as organizations expanded their portfolios and filled in gaps. Not surprisingly, mergers significantly slowed down during the COVID-19 pandemic as organizations focused on market changes and adjusting their teams and expenses, to survive the drastic enterprise changes and shift to remote work environments. Some deals made headlines during the pandemic, but overall, the industry’s M&A was quieter than usual. But mergers and acquisitions have again started to pick up following the 2020 decline.

Latest cybersecurity M&A news: Wipro yesterday said it will acquire Austin, Texas-headquartered Edgile for USD $230 million, a move that will strengthen the IT major’s play in the cybersecurity services space. Edgile’s experienced cybersecurity and risk management professionals will allow Wipro to further enhance its cybersecurity and risk consulting capabilities for the benefit of its customers, a regulatory filing said. In addition, the company’s ‘strategy-first’ approach and ‘Quick Start’ solutions will allow the combined entity to deliver enhanced value in strategic cybersecurity services, it added. The transaction is expected to be completed before Mar. 31, 2022, subject to regulatory approvals and customary closing conditions, the filing said.

Crossword Cybersecurity PLC said Tuesday it has agreed to acquire an undisclosed cyber-threat company for 1.5 million pounds ($2 million). The U.K. cybersecurity technology commercialization company said that it will pay for the transaction in a mixture of cash and shares, and that some of the payment will be deferred. The company said the deal would bring its portfolio to five cybersecurity offerings alongside its cybersecurity consulting business. “We are delighted to have the opportunity to acquire this fast growth company, and to complete our objective of having five cybersecurity software as a service products in our portfolio almost a year ahead of schedule,” Chief Executive Tom Ilube said.

Strategic mergers can fill gaps in existing platforms and fortify the electronic barrier from outside threats. While increased strength is a plus, some other attractive gains from a consolidation include the merging of data feeds, security orchestration, automation, and response. This all contributes to a whole suite of protections that have the ability to communicate with one another such as cloud threat protection, two-factor authentication, and recovery services. AccessHeat is in the market to acquire cybersecurity firms and leverage their varied technologies to achieve combinational and transformational synergies. If a profitable exit strategy is one of your future goals, our investors will work directly with you to transition your company into our investment firm.