40 cloud security firms gobbled in M&A frenzy

Flurry of activity in first half of 2015 sparked by rise in high-profile data breaches, says merger adviser Hampleton

Almost as many cloud security vendors were acquired in the first half of 2015 as the entire two years that preceded it, according to merger advisory firm Hampleton.

According to Hampleton's latest report on M&A activity in the SaaS and cloud services market, some 40 security SaaS firms were snapped up in the six months to 30 June 2015 as high-profile hacks such as the Sony Data breach sparked an M&A feeding frenzy.

This compares with 45 acquisitions of security SaaS firms in the whole of 2013 and 2014.

Blue Coat Systems' $2.4bn (£1.6bn) acquisition by Bain Capital - almost twice what previous private-equity owner Thoma Bravo paid for it - was the period's largest acquisition in the SaaS security space.

Hampleton said growth in cloud adoption is also fuelling a commensurate boom in M&A activity in the wider SaaS market.

Roughly 500 SaaS or cloud-based businesses were acquired in the first half of 2015 - more than double the equivalent period two years prior. The transaction value of these acquisitions combined was $25.5bn.

Private equity house Vista Equity Partners emerged as the most prolific acquirer during the period, making 14 purchases, with accounting software vendor Intuit and software and services giant IBM joint second, each buying 12 firms. Twitter was fourth after gobbling up 10 cloud firms in the first half.

And neither are valuations of cloud firms falling, Hampleton noted, with the median enterprise value per share over the last two and a half years growing to 3.8 and median EBITDA multiples at 15.1.

Breaking it down by geography, 74 per cent of SaaS targets acquired in the first half were based in North America, with 19 per cent based in Europe and seven per cent in the rest of the world.