Sumit Dhawan, CEO of Proofpoint, took the reins as head of the cybersecurity firm in 2022, a yr after it was acquired by Thoma Bravo for $12.3 billion. He is been pushing the agency to think about strategic alternatives similar to mergers and acquisitions of smaller cybersecurity gamers to spice up the corporate’s market growth and stimulate business consolidation.
Proofpoint
LONDON — Privately-held cybersecurity agency Proofpoint is exploring tapping exterior traders for pre-IPO financing and the consideration of mergers and acquisitions of smaller cyber firms because it seeks a return to public markets in 2026, CEO Sumit Dhawan advised CNBC.
“We are looking at potentially exploring public markets sometime in the next 12 to 18 months,” Dhawan, who took the reins as Proofpoint’s newly appointed chief in 2022, a yr after the corporate was acquired by non-public fairness agency Thoma Bravo.
Dhawan added that the timing of Proofpoint’s IPO would nonetheless stay depending on basic market circumstances in addition to the end result of the 2024 U.S. presidential election.
Since Proofpoint’s 2021 buyout by Thoma Bravo and Dhawan’s subsequent appointment as CEO, firm administration has been pushing the agency to think about strategic alternatives similar to mergers and acquisitions of smaller cybersecurity corporations to stimulate business consolidation.
Noting that there are at present too many gamers within the cybersecurity market, Dhawan stated that Proofpoint is at present searching for acquisition targets that supply a “strategic fit” for the corporate — for the appropriate worth.
“It’s happened in many other technology spaces — it happened with infrastructure, it has happened in the application platform space — where you start building fewer providers but richer platforms and, as a result, there will be consolidation,” Dhawan advised CNBC in an unique interview this week.
“There are at this point in time, 2,000 or so non-profitable cybersecurity companies that are venture-backed, so clearly they’ll either get consolidated or potentially not exist. Because there’s no way any market can have that many players. So it’s going to happen, it’s bound to happen.”
Dhawan stated he is discovering there is a little bit of a “bid-ask spread” out there at present in the case of cybersecurity alternatives, that means goal firms are asking for more cash on the sale worth than the valuations they’re being supplied. However he added that he is seeing some “great opportunities” out there.
The street from non-public to public
Based in 2002 in Silicon Valley, Proofpoint makes know-how that helps firms stop phishing makes an attempt and different cyberattacks throughout a spread of platforms, together with e mail, social media, cell gadgets, and the cloud.
Proofpoint went public within the U.S. in 2012, however subsequently delisted after Thoma Bravo acquired the corporate in a $12.3 billion deal in 2021. The buyout got here after investor considerations over a deceleration in income progress.
Now, Proofpoint is as soon as once more trying to faucet the general public markets.
“We are a little bit different from typical companies going to IPO,” Dhawan stated. “They tend to be smaller. They tend to have a very different profile. They tend to have uncertainty in terms of profitability, and they tend to not be in position to easily consolidate.”
Taking Proofpoint public would not mark the primary time an organization Thoma Bravo acquired in a non-public fairness buyout has executed an IPO for a second time. In 2019, cybersecurity agency Dynatrace, which Thoma Bravo took non-public in a 2014 buyout, went public once more in a New York itemizing.
Proofpoint will undergo “multiple rounds” of financing to increase possession of the corporate by different non-public fairness traders, Dhawan advised CNBC, including that personal placements — gross sales of shares to pre-selected traders versus basic gross sales to the general public — are amongst choices it is contemplating.
“We’re close to starting the process” for fundraising from traders past its non-public fairness homeowners, Dhawan stated. Nonetheless, he careworn the agency hasn’t formally set off this course of.
Proofpoint’s boss stated he hopes that what separates his firm from different tech and cybersecurity corporations looking for an analogous IPO route, is an effective stability of progress and profitability, double-digit progress, and powerful management in its market.
