Cybersecurity Report Predicts Record Deal Activity

ICON Corporate Finance’s April 2021 cybersecurity sector report has explored the strong momentum in the cybersecurity market, where sector valuations have hit historic highs over the past 12 months.

With cybercrime remaining a major threat, costing the global economy $600bn annually, ICON forecasts a record year for M&A and fundraising activity in the sector, driven by investors and acquirers ready to deploy large funds to gain a key foothold in the market, raising the prospect of stellar valuations.

Key insights: 

  • Cybersecurity fundraising activity is on track for another record year: in Q1 2021 $3.7bn was invested by VCs globally, an increase of +35%. That looks set to shatter 2020’s record $8.3bn (+22%).
  • The resilience of the market was demonstrated as more than $22bn in M&A deal value was transacted,­­­ despite the challenges of a global pandemic.
  • Public cybersecurity stocks have traded at all-time highs, seeing the sector more than double in value since lockdown restrictions began in March 2020. ICON’s Cybersecurity Sector Indexshows that the sector is now trading at 11x revenues.
  • ICON predicts a wave of cybersecurity businesses ready to capitalise on the extraordinary market opportunity, boosted by VCs flooding the industry with necessary funding.

The report sets out the background to the sector’s phenomenal growth, adapting seamlessly to a rapidly evolving threat landscape as organisations have recognised the need for increased fortification of their IT estates and networks.

Report author Florian Depner, Director of ICON Corporate Finance, explained: “94% of organisations worldwide have suffered a data breach as a result of a cyber-attack in the past 12 months. The Covid-19 pandemic has exacerbated this. Cybersecurity is now a mission-critical business investment category, with a market worth greater than $150bn. Investors and acquirers are recognising this trend, and there’s a lot of dry powder ready to be deployed. That means the market is on course to outpace last year’s record funding and M&A activity.”

Compounding this further, the shift to a digitally transformed enterprise ecosystem, with scattered workforces and online consumers, has put unprecedented pressure on governments to adapt data protection requirements, address data privacy and surveillance issues, and protect critical national infrastructure from cybercrime.

ICON’s report highlights 2021’s hot sectors, and predicts that healthy sector fundamentals, attractive business models and a buoyant public market provide the right ingredients for an exciting deal environment and continued strong growth of the industry.

To read the full report, click here

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