Cyber Security M&A: Decoding deals in the global Cyber Security industry

Global Cyber Security spending is expected to reach $60 billion in 2011 and is forecast to grow at 10 percent every year during the next three to five years. The U.S. accounts for more than half of all deals globally triggered by growing cyber threats and increasing awareness among both organizations and consumers of accelerating breaches and attacks, from our report. Total deal activity since 2008 has exceeded $22 billion globally. In the first half of 2011, there were 37 deals accounting for over $10 billion in deal value, representing a 70 percent increase compared to full year 2010. Since 2008, the total investment in global Cyber Security deals has exceeded $22 billion, an average of over $6 billion in each year.

In most regions, the private sector accounts for the majority of Cyber Security spending, while the U.S. is the notable exception where government spending is almost equal to the private sector. The strong U.S. technology industry combined with the fact that the U.S. defense and intelligence budgets are significantly larger than in any other country are key market drivers.

Other key drivers underpinning growth in Cyber Security spending include:

  • Increasing cyber threats, both from new actors and new threat vectors (the paths that attacks can take).
  • Greater vulnerabilities due to the more pervasive use of technology, particularly mobile devices and cloud computing.
  • Increasing awareness by organizations and consumers of the threats and potential threats.
  • Changes in technology driving product and service innovation of security solutions.
  • Increasing regulation, particularly those enforcing the requirement to secure personal data.
  • Changes in outsourcing; some organizations are increasingly relying on partners for security, whilst others are growing internal security spending to maintain greater levels of control.