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Thoma Bravo buy of Proofpoint marks high non-public fairness cloud deal 

Gary Steele, CEO, Proofpoint

Scott Mlyn | CNBC

Even with non-public fairness corporations spending file quantities of money for software program lately, Thoma Bravo simply trumped all of them, saying the most important cloud buyout ever on Monday.

Thoma Bravo stated it is shopping for safety software program vendor Proofpoint in a deal valued at $12.3 billion. The announcement comes 4 days after Thoma Bravo closed its prior high cloud acquisition — the $10.2 billion buy of RealPage, which serves the true property trade.

The buyout agency has been build up a portfolio of cloud software program distributors, focusing totally on corporations which have seen slowing development charges and are promoting at reductions to their friends. Based in 2002, Proofpoint went public 9 years in the past and simply handed $1 billion in annual income by offering software program to cease malware and assist companies shield staff from phishing and different scams throughout cell and cloud.

“We imagine this can be a nice exit for an organization that has considerably decelerated over the previous two years,” wrote analysts at Mizuho Securities, in a be aware to purchasers. Proofpoint’s income development slowed to 18% in 2020 from 24% in 2019 and 39% the yr earlier than that.

Previous to Monday’s announcement, the biggest cloud software program buy in non-public fairness got here in 2019, when an investor group led by Hellman & Friedman agreed to purchase Final Software program for about $11 billion. Thoma Bravo’s different cloud acquisitions embrace the $3.7 billion buy of Ellie Mae in 2019 and the introduced $2.4 billion buy of Talend final month. Robert Smith’s Vista Fairness Companions has been the opposite large non-public fairness purchaser in software program, buying corporations together with Apptio, Mindbody and Pluralsight.

On the buy value of $176 a share, Thoma Bravo is valuing Proofpoint at about 9.5 occasions income for 2021. That is after a 34% premium to Friday’s closing value. Among the many 58 corporations in Bessemer Enterprise Companions’ cloud index, solely 15 others commerce under 10 occasions ahead income. Corporations with the very best multiples, Snowflake and, have ratios nicely above 40.

As a personal fairness purchaser, Thoma Bravo’s goal is to unlock alternatives for development and profitability that may ultimately make Proofpoint extra beneficial in a future IPO or at a better value to a strategic purchaser.

“Proofpoint’s alternative as a privately held firm is extremely compelling, and we stay up for working intently with them to drive continued enterprise development and ship world-class superior risk safety to much more clients in much more methods,” Seth Boro, a managing accomplice at Thoma Bravo, stated within the press launch.

At over $12 billion, bolstering worth by a substantial quantity is a problem within the highly-fragmented world of safety software program. Amongst pure-play safety distributors, probably the most beneficial firm is CrowdStrike, with a $50 billion market cap and 82% development charge. Then comes Palo Alto Networks at $35 billion, Fortinet at $33 billion and Zscaler at $27 billion.

Thoma Bravo has made quite a few safety software program acquisitions prior to now, however nothing near this dimension.

Analysts at Piper Sandler wrote in a report on Monday that extra corporations are centered on defending their e-mail techniques since Microsoft disclosed a hack of its Change Server software program final month. Chinese language hackers gained entry to enterprise e-mail accounts by means of vulnerabilities in Change, beginning in January.

“This acquisition comes within the wake of the current MSFT alternate breach, which in our opinion is driving elevated curiosity in e-mail safety,” the analysts wrote.

WATCH: A cybersecurity inventory analyst weighs in on the Microsoft e-mail hack

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