2016 IPO Prospects: Optiv Grows Inorganically

According to a MarketsandMarkets report, the cyber security market is projected to grow 10.6% annually over the next five year period to be worth $202.36 billion by the year 2021. The industry is estimated to be worth $122.45 billion this year. The report projects the highest growth in the application security market.

Optiv’s Offerings

Denver-based Optiv was formed in 2015 out of the merger of Accuvant and FishNet Security to become one of the largest comprehensive pure-play cyber security solutions provider in North America. Accuvant was founded in 2002 and was acquired by private equity firm Blackstone in March 2014 while Investcorp acquired a majority stake in FishNet Security in January 2013. The merged new company Optiv provides services and solutions related to security program strategy, enterprise risk and consulting, threat and vulnerability management, enterprise incident management, security architecture and implementation, training, identity and access management, and managed security.

Optiv is helping address the cyber security problems faced by organizations by offering a holistic approach as a solution provider, and not just a reseller. To cater to that objective, it helps organizations define business objectives, identify risks, prioritize data, strategy, processes and technology. Since being founded, it is providing these security services to more than 12,000 clients of various sizes across multiple industries and geographies.

The cyber security market is witnessing a lot of integration. Earlier this year, Investcorp’s SecureLink announced plans to acquire Optiv’s Nordic competitor CoreSec for an undisclosed sum.

Optiv’s Acquisitions

Optiv itself was created out of an acquisition and it continues to grow inorganically. Since the start of the year it has made three acquisitions within the cyber security space. In April this year it acquired Pasadena-based Advancive to grow its identity and access management offerings. The acquisition will add capabilities around managed security services for identity and access management along with enhanced global consulting and services capabilities. Prior to the acquisition, Optiv was witnessing 40%-50% growth annually within the identity and access management space. The acquisition will help Optiv double its identity and access management practice. Terms of the deal were not disclosed.

Optiv followed up the acquisition with another California-based security service provider Evantix. Evantix is a provider of a Software-as-a-Service application for managing third-party risk. Post the acquisition, Optiv has been working on integrating Evantix’s technology platform with Optiv’s existing third-party risk services to develop the industry’s first holistic, cloud-based third-party risk cyber security solution. The terms of the transaction were not disclosed.

Finally, in June this year, it announced the acquisition of another technology services provider Adaptive Communications. Adaptive Communications has been focused on becoming a premier value-added reseller, designer, and installer of enterprise networking, information security, and data storage solutions on the East Coast. The terms of the deal were not disclosed. The acquisition will help expand Optiv’s reach within the East Coast of the country.

Optiv’s Financials

Optiv is privately held and does not disclose detailed financials. But in 2014, Accuvant and FishNet had pro forma revenues of $1.5 billion. As of 2015, Optiv is estimated to have grown those revenues to $2 billion. The recent acquisitions are expected to help it grow the revenues significantly.

The company’s funding details are not disclosed either. But Blackstone is the majority stakeholder in the entity with investment from Investcorp. In April this year, Optiv was estimated to be valued at $2 billion. It seems a low valuation for a company that is estimated to be generating $2 billion in revenues itself. Optiv is now preparing to go public and it’s financials and associated valuation should reveal a clearer picture.

Photo Credit: Tactical Technology Collective /Flickr.com

This segment is a part in the series : 2016 IPO Prospects