Thoma Bravo acquires ForgeRock

Wednesday 12 October 2022 11:12 CET | News

Thoma Bravo, a US-based private equity and growth capital firm, has acquired ForgeRock, a digital identity provider, for USD 2.3 billion.

ForgeRock is the third company it has purchased in this category in 2022 alone. In April it acquired SailPoint for USD 6.9 billion, and in August it snagged Ping Identity for USD 2.8 billion. That’s a USD 12 billion investment to build a software category in-house.

With ForgeRock, it’s getting a 12-year-old identity management company that raised over USD 230 million. The company raised USD 93.5 million in April 2020 before filing for an IPO in August 2021. After a little over a year, the company will go private again.

As for the deal, the private equity firm paid USD 23.25 per share. The company’s stock price was down over 9% for 2022, which given the beating some tech stocks have been taking this year isn’t bad.

Thoma Bravo’s officials admitted that the company likes identity-centric approaches to security, as cybersecurity solutions are a critical enabler for businesses to digitally transform their operations, and ForgeRock’s solutions combine both the security and customer usability needed in the market.

Thoma Bravo’s focus on cybersecurity

In 2019, Thoma Bravo was announcing it was buying Sophos, a UK-based cybersecurity company, for USD 3.8 billion. The acquisition was completed in 2020 and was followed by the purchase of Bottomline. The later company was bought for USD 2.6 billion, with the deal being closed in 2022.

Thoma Bravo, a US-based private equity and growth capital firm, acquires ForgeRock, a digital identity provider, for USD 2.3 billion.

The series of acquisitions continued with SailPoint and Ping Identity, as Thoma Bravo has been one of the groups of private equity (PE) firms that has been scooping up tech companies in recent months capitalising on the current climate. Companies that are targets have included those that have been struggling to perform well in the public markets, those finding it a challenge to scale and raise money in later-stage rounds, and those that had been planning to go public but have not been able to due to market conditions and the general cool state of the IPO market.

Acquiring cybersecurity companies

PE firms have become major targets for hackers due to the sensitivity of the information they handle like financial and personal data, therefore PE dealmaking activity in the space is going strong as investors look to take advantage of the sector's declining valuations and stable business model characterised by low client churn and high margins.

Almost every new technological innovation that includes sensitive data or communications requires a corresponding cybersecurity innovation to protect that data and innovation, and the scale of corporate and geopolitical threats against critical infrastructure may mean cybersecurity stocks should be valued more like defence stocks than like technology stocks.

To meet this growing demand, the market is swelling with small companies that provide highly targeted and technical products to address specific cybersecurity needs, which is driving an active M&A environment. New companies are formed at a rate that is hard to match by consolidation.

So far in 2022, private equity sponsors and their portfolio companies have backed 162 cybersecurity deals worldwide valued at USD 34.9 billion, including both add-on and platform acquisitions, according to PitchBook data.

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Keywords: acquisition, identity verification, digital identity, investment, IPO
Categories: Fraud & Financial Crime
Companies: ForgeRock, Thoma Bravo
Countries: United States
This article is part of category

Fraud & Financial Crime



Thoma Bravo

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