Private Equity Firm Marlin to Buy Fidelis Cybersecurity Solutions


April 15, 2015

Private equity firm Marlin Equity Partners announced on Tuesday it has agreed to buy Fidelis Cybersecurity Solutions from General Dynamics. The threat detection services business has been sold for an undisclosed sum.


The Deal Details
The Los Angeles-based private equity firm said it is looking to finalise the deal during the second quarter of the year. Fidelis Cybersecurity Solutions’ current president of General Dynamics will become the CEO of the new company, which will be called Fidelis Cybersecurity.


Marlin Equity Partners principal, Peter Chung, said in the statement, “Marlin is very excited to partner with Fidelis’ world class management team to expand and grow the company’s industry-leading solutions. As global cybersecurity threats continue to become more prevalent, Fidelis’ technology is uniquely positioned to help customers defend themselves against advanced malware attacks and internal and external data theft.”


Marlin Equity Partners will buy the company from General Dynamics, which purchased the company in 2012. The parties have so far remained silent on the financial details of the deal.


The private equity firm has currently over $3 billion of capital under management. It is focused on investing in multiple industries, with the focus on sectors “where its capital base, industry relationships and extensive network of operational resources significantly strengthens a company’s outlook and enhances value”.


Increased Focus on Cybersecurity
Indeed, the technology sector is increasingly focused on cybersecurity, both in business and governmental level. Yahoo Finance pointed out that in the US, the federal government is set to spend more money on protecting its interests from cyber attacks.


According to the report, president Barack Obama’s budget proposal for 2016 seeks to spend $14 billion in cybersecurity efforts across the US government. Both governmental organisations as well as businesses are set to seek increases in spending globally, as attacks are becoming ever more sophisticated.


Fidelis Cybersecurity Solutions is well placed to provide solutions with problems like this. Its most well known product is Fidelis XPS, an advanced threat defence platform, which is used globally by some of the largest organisations to protect against outside threats. Fidelis has, according to Yahoo Finance, doubled in size under General Dynamics.


Growing Market
The private equity firm is moving into the sector at a lucrative time. According to NSS Labs, a research firm focused on the breach detection systems (BDS), the market is set to grow 36.9% annually until 2018. This would give the sector a total market size of $1.39 billion.


The research firm believes the sector will continue to see further acquisitions, with firms competing for the best deals. This could provide plenty of new opportunities also for private equity firms with a focus on technology and software development.


Rob Ayoub, research director at NSS Labs, said in the statement, “With the ongoing stream of high profile breaches, it’s clear that the market for Breach Detection Systems will continue to be a fast growing and evolving market for the next several years.” It remains to be seen what private equity firms might get involved in the sector next.

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