Private equity (PE) firm Thomas Bravo is to take UK cybersecurity company Darktrace private in a deal valuing the firm at over $5 billion. The US-based PE firm, which manages around $140 billion in assets, intends to use its US market experience to expand Darktrace’s worldwide operations. News of the deal comes hard on the heels of better-than-expected quarterly earnings from US tech giants Alphabet and Microsoft.
Darktrace claims to be a global leader in cybersecurity artificial intelligence (AI), protecting over 9000 customers from ransomware, cloud, and software-as-a-service (SaaS) attacks. Its main research center is in Cambridge, UK, with a second research and development facility in the Hague, Netherlands. The firm holds over 145 patents and pending applications.
Turbulent period for Darktrace
The UK-based cybersecurity company is currently trying to distance itself from its founder Mike Lynch, who stands trial in the US for alleged fraud at Autonomy, another company that he founded. Lynch and his wife are believed to stand to make almost £300 million from the Thoma Bravo deal, which marks the end of a turbulent period for Darktrace’s share price.
Not long after it was originally listed on the London Stock Exchange in April 2021 at 250p a share, stockbroker Peel Hunt reported that it valued Darktrace at only half of its market value. New York-based Quintessential Capital Management subsequently published a report that was highly critical of Darktrace’s business practices. It alleged that Darktrace had simulated or anticipated sales to “phantom” customers. The report also alleged the company appeared to have incorrectly booked sales of hardware as software and might also have misrepresented the nature of its revenues.
The deal to take Darktrace private values the shares at 620p each—a 20 percent premium on the previous day’s closing share price. It is being seen as a signpost for future consolidation in the global cybersecurity sector. Thoma Bravo, which was founded over 40 years ago, owns dozens of enterprise software businesses in the US. The American PE firm also announced a deal earlier this year to buy German compliance software company EQS Group.
