Getting Back to Normal

Cybersecurity M&A should continue this year, but not at the same valuations as 2021, said Progress Partners’ Parag Sheth.

“For cybersecurity, 2021 was a big year in terms of multiples for M&A,” he said. “And anybody who transacted will tell you that a number of deals … happened at the highest valuation. However, I think in 2022, especially toward the end of 2022, we went down from a 15x multiple to a 7.5x multiple. If you take the five-year average before COVID-19 of what multiples ran at, which was 8.4x, give or take, we are trending back to normal in my world. And I think this year it’s going to get even more normal.”

When capital costs more and there’s no clear IPO market, there’s still going to be a lot of private cybersecurity M&A this year, but it will likely be more tempered, said Cyber Advisory Partners’ Eric Bell.