June 2, 2021
The transaction will separate FireEye’s network, email, endpoint and cloud security products, along with the related security management and orchestration platform, from Mandiant’s controls-agnostic software and services. FireEye and STG should close the deal by the end of the fourth quarter.
STG is a private equity firm in Silicon Valley.
The separation will allow both organizations to accelerate growth investments. They’ll also pursue new go-to-market directions and focus innovation on their respective products and services.
The FireEye products business and Mandiant solutions will continue to operate as a single entity until the transaction closes. Management and STG will develop a transition of the FireEye products business to a standalone entity within the STG portfolio.
Mandiant to Emerge as Separate Public Company
FireEye acquired Mandiant in late 2013. Post-closing, the company will continue to publicly trade as Mandiant. The company will determine a new ticker symbol in the coming weeks.
For FireEye products, this means “strengthened channel relationships” with MSSP providers based on integration alliances with complementary cybersecurity product vendors, FireEye said.
Keep up with the latest channel-impacting mergers and acquisitions in our M&A roundup.
Kevin Mandia is FireEye‘s CEO. He said the separation will unlock the high-growth Mandiant solutions business. And both organizations will better serve customers.
FireEye’s Kevin Mandia
“After closing, we will be able to concentrate exclusively on scaling our intelligence and frontline expertise through the Mandiant Advantage platform, while the FireEye products business will be able to prioritize investment on its cloud-first security product portfolio,” he said. ” STG’s focus on fueling innovative market leaders in software and cybersecurity makes them an ideal partner for FireEye products. We look forward to our relationship and collaboration on threat intelligence and expertise.”
William Chisholm is managing partner at STG.
“We believe that there is enormous untapped opportunity for the business that we are excited to crystallize by leveraging our significant security software sector experience and our market-leading carve-out expertise,” he said.
Pushing the Reset Button
Eric Parizo is principal analyst of Omdia’s cybersecurity operations intelligence service. He said this move “pushes the reset button” on the business. It sheds the products unit, which was struggling to grow. Furthermore, it uses the proceeds to accelerate the growth and value of the security services business Mandia knows and understands.
“Regarding the products business, Mandia and his team no doubt recognized that its appliance-based businesses did not offer strong prospects for long-term revenue growth,” he said. “As of late 2020, its billings and revenue from products was down approximately 15% from two years ago. And per Mandia’s own comments today, the products business was hindering the growth potential of the services business. The managed defense business was essentially tied to the use of FireEye endpoint and other products, which services customers often didn’t have and didn’t want.”
The future Mandiant will be technology agnostic in its engagements, Parizo said. That opens up more business opportunities, as evidenced by its recently signed partnership agreement with Microsoft to employ Mandiant’s threat hunting expertise with Microsoft Defender.
Uncertain Future for FireEye Products Business
Unfortunately, the future for the FireEye products business, and its employees and customers now becomes highly uncertain, Parizo said.
“Its future owner, private equity firm STG, already owns hybrid cloud security posture management vendor Redseal, as well as multifaceted vendor RSA Security,” he said. “Plus it is set to close on its acquisition of the McAfee enterprise unit later this year. Upon close, the addition of the FireEye products group will give STG a massive enterprise security portfolio, but one with redundancies in numerous areas, including endpoint security, SIEM, network forensics, malware sandboxing and many others.”
Because the deal includes the FireEye brand, the most likely scenario is that STG will allow the new FireEye to exist independently, Parizo said.
“However, my understanding is that the deal does not include any business-side support,” he said. “And because McAfee similarly lacked those business support functions when it was spun out of Intel in 2017, it essentially crippled McAfee’s operations for the better part of a year.”
For that reason, STG may combine the McAfee enterprise business with FireEye, operating under the FireEye brand, Parizo said.
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