The cybersecurity landscape is witnessing a significant trend towards consolidation, with larger players acquiring startups to combat the ever-expanding attack surface of enterprises as they move more activity into the cloud. The latest development in this space is CyberArk’s acquisition of Venafi, a specialist in machine identity, for $1.54 billion.
A Pivotal Milestone for CyberArk
The deal marks a significant milestone for CyberArk, one of the leading security companies founded out of Israel. With this acquisition, CyberArk will expand its total addressable market by $10 billion to a total of $60 billion. The company’s CEO, Matt Cohen, stated that the acquisition will enable them to further their vision of securing every identity – human and machine – with the right level of privilege controls.
The Need for Machine Identity Security
In today’s market, security teams are struggling to get a better understanding of the threat landscape and attack surface of their organizations. The growth of mobile technology, cloud services, and distributed working has led to an explosion of computing endpoints, including devices that people use to connect to a network and any other device on the network where data is being processed or stored.
The Rule of Thumb: 40 Machines per Human
According to industry experts, there are approximately 40 machines for every human on an enterprise network. This has led to a significant surge in business for companies that focus on identity security. Startups like Oasis Security and Silverfort have raised large amounts of money to tackle this growing problem.
Venafi’s Technology: Securing Machine Identities
Venafi’s technology focuses on securing and understanding the flow of data between machines. The company is described as a specialist in PKI (Public Key Infrastructure) and certificate management. CyberArk believes that the deal will enable them to expand their abilities to secure machine identities in a cloud-first, GenAI, post-quantum world.
The Deal: $1.54 Billion for Venafi
The acquisition price of $1.54 billion is moderate compared to the $1.15 billion valuation when Thoma Bravo bought its controlling stake in 2020. The deal will be paid out as follows:
- $1 billion in cash
- Approximately $540 million in shares
Shareholders’ Approval
The acquisition has been approved by shareholders of both companies and is expected to close in the second half of 2024.
Consolidation Trends in Cybersecurity
This deal underscores some trends playing out among cybersecurity companies. Some companies that raised money several years ago at higher valuations are finding those valuations under pressure as they struggle to grow ARR (Annual Recurring Revenue) or maintain their market share. This has led to a wave of consolidation, with larger players acquiring startups to strengthen their offerings and stay ahead in the market.
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This acquisition marks a significant milestone for CyberArk and highlights the growing need for machine identity security in today’s digital landscape. As consolidation continues to shape the cybersecurity industry, it will be interesting to see how other companies respond to this trend.
