Recent volatility in capital markets, combined with evolving dynamics in the cybersecurity sector, has triggered an exponential boom in cyber mergers and acquisitions (M&A) across the U.S., Europe, and Asia. Several key trends are driving this surge.
AI Accelerates Acquisitions
Emerging AI technologies are increasing both the intensity and the complexity of cyber attacks—and the defenses against them. Medium and large cyber companies are rushing to acquire cyber AI technologies, even if the target is small and without revenues, to ensure their business models remain defensible in the AI era.
For example, Allurity, a European cybersecurity leader, acquired Onevinn, a Swedish company in the intelligent automated security and managed services area, in April. Onevinne, a Microsoft partner in Europe, aims to support Allurity’s European leadership in the holistic cyber space.z
Holistic Cyber Platforms Drive Deals
Many cyber players believe that the future of cyber procurement is holistic, and cyber buyers, especially CISOs, will be looking for a one simple platform that would provide the various cyber solutions.
A recent example is Palo Alto Networks’ acquisition of CyberArk. Both U.S.-listed companies are global cybersecurity leaders, and the deal has been described by executives as an effective way to holistically address future cyber threats.
Cash-Rich Companies Fund Acquisitions Internally
Many cyber companies have accumulated significant cash that allows them to finance acquisitions more easily. The growing cyber services market in light of the rising cyber threats has helped this trend. While in the past many cyber deals were financed by Private Equity financing, today the cyber companies have enough cash to fund them themselves.
SentinelOne, an American public company with almost $1 billion cash on hand as of April, announced the $250 million acquisition of Prompt Security to expand into generative AI security. Prevention of data leakage from generative AI tools is becoming a key area of growth for many cyber companies.
Geopolitical Tensions Boost Cyber Investments
Rising aerospace and defense expenses due to global geopolitical tensions, on both the governments side and the private companies’ side, are further supporting the cyber sector..
Many defense products and solutions are directly tied to cyber technologies, and the current conflicts in East Europe and the Middle East are full of cyber activities. Italy’s major defense group Leonardo announced this summer the acquisition of SSH Communications Security Corporation, a European cybersecurity company.
M&A as a Stable Alternative to Public Markets
Since the chaotic IPOs market of 2021, during the Covid-19 pandemic, cyber companies have sought alternative paths to growth and liquidity. Converting smaller cyber technology companies into larger companies with higher valuation via M&A has emerged as a solid alternative to the public markets.
From weekly trade tariffs announcements to to global military conflicts, markets have been increasingly perceived as unstable and inconsistent.
The M&A market, on the other hand, is now considered as a quicker and more stable path for founders to cash in. All these factors suggest that the cybersecurity M&A trend will continue to grow as public markets struggle to provide the same stability and returns.
