Trends in Acquisitions and Consolidation
San Jose-based Zscaler has made several acquisitions since the surge in mergers and acquisitions (M&A) within the cybersecurity field in 2021, bringing in firms such as ShiftRight, Airgap Networks, and Canonic, along with Avalor and Red Canary. These acquisitions have enriched Zscaler’s offerings in areas like zero trust, security workflow automation, and secure access service edge (SASE). The Red Canary deal is among numerous acquisitions in the cybersecurity space since January, which include notable moves from major players like Google’s $32 billion investment in Wiz to expand its cloud security capabilities, as well as acquisitions by companies like Palo Alto Networks and Tenable.
Looking Back at 2024
The current M&A activity follows an eventful year in 2024, marked by a significant increase in cybersecurity acquisitions to consolidate capabilities and address new threats. Paul Arceneaux, a vice president at VikingCloud, noted that trends such as cloud technology and AI are becoming central issues in cybersecurity. He emphasized that tech giants like Google, Amazon, and Microsoft are challenging traditional cybersecurity firms by integrating their offerings into cloud services, thus creating potential disruptions in the market.
Security Platform Integration
Arceneaux also highlighted the growing trend among cybersecurity firms to develop integrated product platforms. This strategy helps organizations to manage all security needs from a single source rather than employing various stand-alone solutions. Major companies like Palo Alto Networks and Fortinet continue to acquire niche firms to create extensive offerings that cover detection, prevention, and response solutions. This creates advantages for consumers but also raises concerns about reducing market competition and innovation.
Impact on MSSPs and MSPs
According to CYRISMA, the consolidation of security capabilities into unified platforms can greatly benefit Managed Security Service Providers (MSSPs) and Managed Service Providers (MSPs). This “platformization” allows service providers to offer diverse services more efficiently through a single product, reducing operational complexities and costs. Such streamlined solutions enhance overall efficiency for service providers.
Ongoing Deal Activity
The cybersecurity advisory firm Altitude Cyber’s recent report outlined trends in the M&A landscape. Strategic acquisitions have surged, with spending nearly reaching $81 billion in 2021, a significant increase from the preceding year. The industry continues to experience around 280 M&A deals and approximately $50 billion spent since then. Grolmus noted a shift, with strategic buyers now more active than those primarily seeking financial gains, while financial services firms have become increasingly involved in acquiring security companies.
Looking Ahead
Trends suggest that cybersecurity capabilities are now being recognized as essential components of broader business strategies. This shift is evidenced by MasterCard’s acquisition of Recorded Future for $2.65 billion. Grolmus pointed out that major players like Cisco and Palo Alto Networks are becoming more active, while early-stage startups are being acquired sooner. The ongoing trend in M&A reflects a stable market environment, marked by the influence of AI on data security. As these trends evolve, they are anticipated to shape the cybersecurity landscape well into 2025 and beyond.
