San Francisco, NFAPost: In a development with far reaching consequence, Private equity firm Symphony Technology Group (STG) announced that it will be combining McAfee Enterprise and FireEye Products into a nearly $2 billion cybersecurity behemoth with more than 40,000 customers and 5,000 employees.
STG acquired McAfee, accumulating its cyber security business to $4 billion in March 2021. The business enterprise, which had decided to operate under STG, McAfee settled $2.9 billion in 2020 revenue.
A few months later, FireEye confirmed its plan to sell its business products to STG for $1.2 billion, with the rest of the company called Mandiant Solutions.
FireEye is a network of traffic, email, border, and cloud security products, with its security and integrated platform, from software and services under Mandiant, which became eminent for its risk intelligence and security expertise.
FireEye’s Bryan Palma, formerly of BlackBerry and Cisco, will become CEO of the combined company. Bryan Palma said the two companies customers need an integrated security platform powered by artificial intelligence, machine learning, and automation.
“We have an incredibly talented team of security professionals who will work tirelessly to deliver this outcome for our customers,” said Bryan Palma.
A name for the combined McAfee Enterprise-FireEye Products business hasn’t been disclosed yet, according to a McAfee Enterprise spokesperson. Symphony Technology Group (STG) obtained rights to the FireEye name as part of its acquisition of the products business, but the McAfee name remains with the company’s $1.56 billion consumer business.
According to Arvian Research, the company’s integrated security portfolio will span endpoints, infrastructure, applications, and the cloud – but will also have a great deal of product overlap that will need to be sorted out.
“The pandemic has really opened up new norm in the industry, across various verticals. So it has made security an important component of all companies future capital expenditure. The coming together of two top security companies in core security markets like endpoint detection and response (EDR) and security information and event management (SIEM),” said Arvian Research.
Commenting on the development, STG co-founder and Managing Partner William Chisholm said in a statement that cyber risk is the number one threat facing modern organizations and STG is excited to advance its growing portfolio of cybersecurity companies.
“Given Bryan and Ian’s respective experiences leading transformations, we are thrilled to partner with them to unlock value in the cybersecurity market,” said William Chisholm.
Analyzing the merge, Doug Cahill, a senior analyst at Enterprise Strategy Group said, FireEye and McAfee are established, respected brands who will need to have a maniacal focus on customer success to retain their account base while rationalizing their collective product portfolio to then communicate to the market the go-forward strategy.
Omdia analytic principal Erik Parizo said at a time when it is becoming more and more common to see large cybersecurities embarrassment companies disrupted – most notably Symantec.
“Of course the union between the two known cybersecurities of this century is very unusual. Insisting a potentially disastrous product” in places including borders, network security, and SIEM, which will need to be settled quickly,” said Erik Parizo.
Erik Parizo said perhaps the most important question is how can these two companies, which have been undermined individually without industry, be able to unite forces to renew their success.
A name for the combined McAfee Enterprise-FireEye Products business hasn’t been disclosed yet, according to a McAfee Enterprise spokesperson. Symphony Technology Group (STG) obtained rights to the FireEye name as part of its acquisition of the products business, but the McAfee name remains with the company’s $1.56 billion consumer business.
It is interesting to note that McAfee initiated a workforce reduction in December 2020 to improve operating margins and reorient its Enterprise business. The company also had decided to spend $16 million in the fourth quarter of 2020 and $30-to-$35 million in the first half of 2021 on the restructuring, consisting of severance payments and other termination benefits.
Likewise, FireEye reduced its headcount by 7 percent over the course of 2020 to align expenses more closely with the company’s projected revenue and position the company for improved operating performance. The company spent $26.5 million on the restructuring over the course of 2020, and the cuts reduced FireEye’s non-GAAP operating income by over $26 million in 2020 as compared with 2019.
