Access Management, Digital Identity, Governance and Risk Management
Sixth-largest deal in security history will expand Thoma Bravo’s cyber footprint
Michael Novinson •
April 11, 2022
Private equity giant Thoma Bravo has agreed to buy enterprise identity security powerhouse SailPoint for $6.9 billion in the sixth largest cybersecurity acquisition of all time.
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The Austin-based company said the proposed acquisition will give SailPoint the flexibility it needs to support its customers, expand its markets and accelerate innovation. SailPoint also expects to benefit from the operational capabilities, capital support and extensive software experience of San Francisco-based Thoma Bravo. The deal is expected to close in the second half of 2022.
“Identity security is critical to cybersecurity, and companies have realized that to drive business growth and success, they must start with identity as the foundation for secure business transformation.” SailPoint CEO Mark McClain says in a statement. “We have experienced rapid growth and see great opportunity ahead to continue to set the pace in the identity security market as a category leader.”
Under the terms of the agreement, SailPoint shareholders will receive $66.25 per share in cash, which represents a 48% premium over the company’s 90-day volume-weighted average price. Shares of the company rose $14.87, or 29.99%, to $64.46 a share in premarket trading on Monday. That is the highest stock SailPoint has traded since the company first went public in November 2017.
The transaction includes a “buy-in” period expiring at 11:59 p.m. EDT on May 16, allowing SailPoint’s board to rescind Thoma Bravo’s proposed acquisition and enter a better proposal from another suitor in the event that an offer materializes. Wedbush Securities analyst Dan Ives says the deal is a “smart strategic move” for Thoma Bravo given the importance of cybersecurity and the continued presence of remote work.
“SailPoint is ideally positioned to capitalize on the large and growing demand from modern enterprises for robust identity security solutions that secure their business,” says managing partner Seth Boro in the Thoma Bravo release. “Its market-leading identity security platform provides the autonomous and intelligent approach that the market requires today, especially among larger enterprises.”
The sixth largest deal in security history
This is the sixth largest cybersecurity deal of all time, behind McAfee’s $14 billion purchase of Advent and Permira in March 2022. Thoma Bravo buys Proofpoint for $12.3 billion in August 2021, Broadcom’s $10.7 billion acquisition of Symantec’s enterprise business in November 2019, Avast’s proposed $8.6 billion purchase of NortonLifeLock in August 2021, and McAfee’s purchase of $7.6 billion from Intel in February 2011.
SailPoint revenue increased to $439 million in 2021, up 20% from $365.3 million a year earlier. The company’s net loss increased to $61.6 million, or $0.67 per share, 473% worse than the net loss of $10.8 million, or $0.12 per share, reported by SailPoint. in 2020. Thoma Bravo executives were not immediately available for additional comment, while SailPoint didn’t immediately respond to a request for comment.
The company has aggressively expanded in recent years through acquisitions. In March 2021, SailPoint purchased ERP Maestro for $28.1 million to help clients identify potential internal conflicts for critical applications like SAP. A month earlier, the company bought startup Intello for $42.9 million to help customers discover, manage and secure SaaS applications that are currently out of reach of the IT organization.
In October 2019, SailPoint purchased emerging providers Orkus and OverWatchID for $37.5 million to detect potential cloud anomalies, enforce access policies for all users, and maintain compliance across enterprise infrastructures. The company’s first acquisition came in July 2015, when SailPoint purchased Whitebox Security to reduce security risk by identifying where sensitive data resides.
“SailPoint is the undisputed leader in providing trusted identity security to the most respected global brands,” says Andrew Almeida, partner at Thoma Bravo, in the release. “As digital transformation becomes imperative for businesses of all sizes to remain competitive, SailPoint’s innovative products provide the foundation for a robust security infrastructure that keeps employees and sensitive information safe.”
The main institutional investors in SailPoint currently are BlackRock, which owns 12.4% of the outstanding shares; HMI Capital Management and Vanguard, which each own 9.7% of the outstanding shares; and SoMa Equity Partners, which owns 5.6% of the outstanding shares, according to documents filed with the Securities and Exchange Commission. McClain, who co-founded SailPoint in 2005, owns 1.4% of the outstanding shares.
Thoma Bravo’s cybersecurity tear
Thoma Bravo has been very active in the cybersecurity space in recent years, buying Barracuda Networks for $1.6 billion in February 2018, SIEM provider LogRhythm in July 2018, data protection and application provider Imperva for $2.1 billion in October 2018, SMB platform security stalwart Sophos for $3.82 billion in October 2019, and email security provider Proofpoint for $12.3 billion in August 2021.
The private equity firm last month sold a majority stake in Veracode to TA Associates in a deal that values the application security provider at $2.5 billion. Thoma Bravo first bought Veracode in November 2018 for $950 million following the purchase of CA Technologies by Broadcom, which owned the company at the time.
Thoma Bravo bought a majority stake in identity management provider Centrify in July 2018, revealing plans three months later to turn the company’s identity-as-a-service business into a separate operation called Idaptive. Thoma Bravo sold Idaptive to Centrify rival CyberArk in May 2020 for $70 million and sold Centrify to TPG in January, where the company merged with Thycotic to form Delinea.