With a growing reliance on technology, it does not come as much of a surprise that the importance of cybersecurity is increasing as well. In its Mid-year Market Review, Momentum Cyber reported that $2.3 billion had already been lost as a result of cryptocurrency breaches. This staggering loss may be one of the many reasons why there is a greater focus on cybersecurity and why the number of mergers and acquisitions ("M&A") in the cybersecurity sector has been rising. It was even predicted in August 2018 that this would be a record year for the industry.

This prediction is evidenced by Blackberry's recent announcement that it intends to purchase Cylance for $1.4 billion in cash. Cylance creates software that is aimed to prevent cyberattacks from occurring on internet-connected devices, such as cell phones and tablets. This acquisition is not the first cybersecurity acquisition for the company. In 2015, Blackberry also purchased Good Technology, a company that specializes in enterprise mobile security products.

Blackberry is not the only company contributing to the recent spike in cybersecurity M&A activity. In August 2018, Cisco announced that it would be acquiring Duo Security for $2.35 billion and only earlier this month, Thoma Brava announced that it would purchase the software security firm Veracode, for $950 million. In the first half of 2018, 101 cybersecurity M&A deals had been reported, resulting in an 11% increase year-over-year.

Reasons for the growing interest in cybersecurity include:

  • An increase in investment opportunities;
  • Further innovation, revealing the need for greater cybersecurity; and
  • The heightened need for confidentiality and anonymity on the internet.

As the end of the year approaches, we will soon learn whether 2018 is in fact a record year for cybersecurity M&A. Moreover, given the importance of cybersecurity and recent acquisitions within the industry, it is likely that the upward trend of cybersecurity M&A activity will persist in 2019.

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