M&A Alert—February 29, 2016
IBM acquires incident response company, Resilient Systems, for $100 million.
Author: Eric Risley & John Ascher-Roberts
Transaction Size: $100mm
On February 29, 2016, IBM (NYSE: IBM) announced an agreement to acquire incident response software provider, Resilient Systems, for a reported $100 million.
Resilient Systems offers a security incident response platform that helps corporations automate the many processes required when responding to cyber incidents. Its Incident Response Platform integrates information from third party security products to create a single hub to control the entire process of identifying a security alerts, providing valuable intelligence and incident context, and enabling security teams to streamline critical actions. Competitors include Digital Guardian, Fireye and CSID. Resilient Systems has 100+ customers, including 30 of the Fortune 100 in more than 19 countries.
John Bruce, CEO, and Ted Julian, VP of Product Management, founded the Cambridge-based company in 2010. Resilient Systems had 101 employees and we believe they had $30 million in 2015 revenue. They received $10 million in funding prior to its acquisition from a number of investors including Fairhaven Capital Partners, Alsop Louie Partners, Hartford Ventures and Eastward Capital Partners.
IBM is the largest technology and consulting employer in the world, with more than 400,000 employees serving clients in 170 countries. IBM offers a wide range of technology and consulting services; a broad portfolio of middleware for collaboration, predictive analytics, software development and systems management; and servers and supercomputers.
IBM Security grew 12% in 2015, becoming a $2 billion revenue business. It hired 1,000 new employees into its security business in 2015
Headquartered in Armonk, New York, IBM has revenue for the last twelve months ending in December 31, 2015 of $81.7 billion and has a market capitalization of $125.9 billion.
IBM is acquiring Resilient Systems for a reported sum of $100 million.
Comparable transactions include FireEye’s acquisitions of Invotas in February of 2016 (undisclosed) and of Mandiant for $1 billion in January of 2014 (6.7x rev), and Marlin Equity’s acquisition of Fidelis Security Systems in April of 2015 (undisclosed).
IBM has been aggressively investing to build its security business over the past several years. Resilient Systems’ incident response platform complements IBM’s security forensics (QRadar), endpoint security (BigFix) and threat intelligence (X-Force Exchange). The combined capabilities offer clients the ability to prevent, detect and respond to security events.
Architect Partners’ Observations
Cyber attacks have increased in both frequency and the cost to remediate the consequences. According to a Ponemon Institute study, the average cost to a U.S.-based company per data breach reached $6.4 million in 2015.