Thoma Bravo buy of Proofpoint marks high personal fairness cloud deal

Thoma Bravo buy of Proofpoint marks high personal fairness cloud deal

Gary Steele, CEO, Proofpoint

Scott Mlyn | CNBC

Even with personal fairness corporations spending document quantities of money for software program in recent times, Thoma Bravo simply trumped all of them, asserting the most important cloud buyout ever on Monday.

Thoma Bravo mentioned 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 buy of RealPage, which serves the true property business.

The buyout agency has been build up 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. Based 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 shield staff from phishing and different scams throughout cellular and cloud.

“We imagine it is a nice exit for an organization that has considerably decelerated over the previous two years,” wrote analysts at Mizuho Securities, in a notice to purchasers. Proofpoint’s income progress slowed to 18% in 2020 from 24% in 2019 and 39% the 12 months earlier than that.

Previous to Monday’s announcement, the most important cloud software program buy in personal fairness got here in 2019, when an investor group led by Hellman & Friedman agreed to purchase Final Software program for about $11 billion. Thoma Bravo’s different cloud acquisitions embody the $3.7 billion buy of Ellie Mae in 2019 and the introduced $2.4 billion buy of Talend final month. Robert Smith’s Vista Fairness Companions has been the opposite huge personal fairness purchaser in software program, buying firms together with Apptio, Mindbody and Pluralsight.

On the buy worth of $176 a share, Thoma Bravo is valuing Proofpoint at about 9.5 occasions income for 2021. That is after a 34% premium to Friday’s closing worth. Among the many 58 firms in Bessemer Enterprise Companions’ cloud index, solely 15 others commerce under 10 occasions ahead income. Corporations with the very best multiples, Snowflake and Invoice.com, have ratios nicely above 40.

As a non-public fairness purchaser, Thoma Bravo’s goal is to unlock alternatives for progress and profitability that may finally make Proofpoint extra invaluable in a future IPO or at a better worth 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 clients in much more methods,” Seth Boro, a managing companion at Thoma Bravo, mentioned within the press launch.

At over $12 billion, bolstering worth by a substantial quantity is a problem within the highly-fragmented world of safety software program. Amongst pure-play safety distributors, essentially the most invaluable 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 previously, however nothing near this dimension.

Analysts at Piper Sandler wrote in a report on Monday that extra firms are targeted on defending their e-mail programs since Microsoft disclosed a hack of its Change Server software program final month. Chinese language hackers gained entry to enterprise e-mail accounts by vulnerabilities in Change, beginning in January.

“This acquisition comes within the wake of the latest MSFT change breach, which in our opinion is driving elevated curiosity in e-mail safety,” the analysts wrote.

WATCH: A cybersecurity inventory analyst weighs in on the Microsoft e-mail hack

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