Cybersecurity M&A is heating up worldwide

cybersecurity; AI;

Cybersecurity consolidation is heating up worldwide. A wave of mergers and acquisitions (M&A) has also swept the Middle East market. There is a growing reliance on data while making key decisions. And weaponization of this data will give companies the final edge.

In 2020, more companies will collect and weaponize data through M&A activity. According to online security firm Precise Security, the value of M&A in the industry reached $21.6 billion in the first 9 months of 2019, up from $1.4 billion in 2010.

“The increase in the value of M&A in the information security market between 2012 and 2019 is astonishing. It has grown 1442% in 7 years,” says the website.

The Middle East has experienced some of the world’s biggest cyber attacks in recent months. The region has now launched major digitalisation initiatives to bid to protect their critical sectors.

Read: 85% of Cyberattacks are Financially Motivated

Earlier this month, Abu Dhabi set up Edge – the largest defence group in the Middle East, in an effort to combine its defence and technology firms. It’s CEO is Faisal Al Bannai, the founder of cyber-security firm DarkMatter.

By 2023, the M&A is expected to reach $151.2 billion due to robust investment in key security solutions. Companies are investing large amounts of money in data loss prevention, compliance and risk management, among other things.

Research firm Forrester in its Cybersecurity Predictions 2020 report has similar views to share. “Laws aimed at limiting how organizations can share their large swathes of data will proliferate globally, but these measures will do little to stop the growing M&A market behind data consolidation. The collecting of preference data, user location, or medical information may be innocuous at first, but should the companies behind today’s leading apps be acquired by a government-owned entity, that data would now be wielded by an adversary,” says the report.

It adds, that costs associated with deepfake scams will exceed $250 million in 2020 and data privacy concerns will lead one in five enterprise customers to safeguard their data from AI.

In November this year, cybersecurity sector’s largest ever deal blockbuster deal set the tone for future deals in the industry– Broadcom’s acquisition of Symantec for $10.7 billion. Top firms Cisco, Palo Alto Networks, Ernt&Young, FireEye, and Imperva have all made cybersecurity-oriented acquisitions this year.

Hampleton Partners, an international mergers and acquisitions and corporate finance advisory firm for technology companies, cites three key trends impacting the race to secure cybersecurity vendors:

1. An exponential increase in the number of devices connected to enterprise IoT networks, providing potential entry points for cyberattackers;
2. Growing volumes of personal data that needs to be secured; and
3. Mounting regulatory and financial penalties for cyber insecurity.

“The number of cyberattacks, as well as their complexity, is growing rapidly. Cybersecurity vendors will have to move quickly to keep ahead of malware and hackers,” says Axel Brill, director, Hampleton Partners.

“Cyberattacks are some of the most dangerous threats for businesses across all sectors and industries, demanding management time and increased investment in technologies like AI to protect against vulnerabilities. There’s no doubt that AI-focused cybersecurity vendors will be the most sought-after future M&A targets in this sector,” he adds.

Read: 33% of UAE Residents Want AI to Look After Their Cybersecurity

Forrester predicts tech giants will invest in cloud workload security (CWS), or securing applications and data in the cloud, and endpoint detection and response (EDR), or technology that continually monitors and responds to cyber threats.

By 2022, Gartner reports that 60% of organizations engaging in M&A activity will consider cybersecurity posture as a critical factor.

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