Gary Steele, CEO, Proofpoint
Scott Mlyn | CNBC
Even with private equity corporations spending report quantities of money for software program lately, Thoma Bravo simply trumped all of them, saying the largest cloud buyout ever on Monday.
Thoma Bravo said it is shopping for safety software program vendor Proofpoint in a deal valued at $12.3 billion. The announcement comes 4 days after Thoma Bravo closed its prior high cloud acquisition — the $10.2 billion purchase of RealPage, which serves the actual property trade.
The buyout agency has been increase a portfolio of cloud software program distributors, focusing totally on firms which have seen slowing progress charges and are promoting at reductions to their friends. Founded in 2002, Proofpoint went public 9 years in the past and simply handed $1 billion in annual income by offering software program to cease malware and assist companies defend staff from phishing and different scams throughout cellular and cloud.
“We imagine this is a terrific exit for an organization that has considerably decelerated over the previous two years,” wrote analysts at Mizuho Securities, in a be aware to purchasers. Proofpoint’s income progress slowed to 18% in 2020 from 24% in 2019 and 39% the 12 months earlier than that.
Prior to Monday’s announcement, the largest cloud software program purchase in private equity got here in 2019, when an investor group led by Hellman & Friedman agreed to purchase Ultimate Software for about $11 billion. Thoma Bravo’s different cloud acquisitions embrace the $3.7 billion purchase of Ellie Mae in 2019 and the introduced $2.4 billion purchase of Talend final month. Robert Smith’s Vista Equity Partners has been the different large private equity purchaser in software program, buying firms together with Apptio, Mindbody and Pluralsight.
At the purchase value of $176 a share, Thoma Bravo is valuing Proofpoint at about 9.5 instances income for 2021. That’s after a 34% premium to Friday’s closing value. Among the 58 firms in Bessemer Venture Partners’ cloud index, solely 15 others commerce beneath 10 instances ahead income. Companies with the highest multiples, Snowflake and Bill.com, have ratios nicely above 40.
As a private equity purchaser, Thoma Bravo’s goal is to unlock alternatives for progress and profitability that may ultimately make Proofpoint extra helpful in a future IPO or at the next value to a strategic purchaser.
“Proofpoint’s alternative as a privately held firm is extremely compelling, and we look ahead to working intently with them to drive continued enterprise progress and ship world-class superior menace safety to much more prospects in much more methods,” Seth Boro, a managing accomplice at Thoma Bravo, stated in the press launch.
At over $12 billion, bolstering worth by a substantial quantity is a problem in the highly-fragmented world of safety software program. Among pure-play safety distributors, the most respected firm is CrowdStrike, with a $50 billion market cap and 82% progress price. Then comes Palo Alto Networks at $35 billion, Fortinet at $33 billion and Zscaler at $27 billion.
Thoma Bravo has made quite a few safety software program acquisitions in the previous, however nothing near this measurement.
Analysts at Piper Sandler wrote in a report on Monday that extra firms are targeted on defending their e-mail methods since Microsoft disclosed a hack of its Exchange Server software program final month. Chinese hackers gained entry to enterprise e-mail accounts by means of vulnerabilities in Exchange, beginning in January.
“This acquisition is available in the wake of the current MSFT change breach, which in our opinion is driving elevated curiosity in e-mail safety,” the analysts wrote.
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