SAN FRANCISCO, Jan 16 (Reuters) - Dave DeWalt, the former CEO of FireEye Inc, is joining the relaunched cyber security M&A advisory firm Momentum Cyber as chairman, the company said on Wednesday.
The San Francisco-based firm was founded by two longtime technology bankers, Michael Tedesco and Eric McAlpine, as Momentum Partners in 2015. It will change its name and now focus exclusively on cyber security M&A, an area it sees underserved by large investment banks. Tedesco worked at Citigroup and Jefferies while McAlpine worked at Blackstone Advisory earlier in their careers.
“We’ve seen $20 billion of venture capital go into the space over the past few years and there are 3,000 vendors. Many are going to merge, or get some investment or recapitalizations. This means the M&A will happen,” DeWalt said in an interview. DeWalt sits on the board of ForeScout Technologies and Delta Airlines Inc.
McAlpine said DeWalt’s connections in Washington and with cyber security companies hatched in Israel will be key to helping the firm succeed.
While Momentum said it is an M&A broker as defined by the U.S. Securities and Exchange Commission, its co-founder McAlpine said it is purposely shying away from the “investment bank” moniker because it provides full advisory services from a company’s founding to its exit.
Last year, Momentum advised on M&A transactions such as ADT’s acquisition of Datashield, Weblife on its sale to Proofpoint Inc, and Cyphort on its sale to Juniper Networks Inc.
The firm estimates there were about 166 global cyber security deals last year where private companies were acquired, totalling $7.8 billion.
Investors are not seeing multibillion-dollar windfalls, however. The median for deal sizes in cyber security was only $68 million last year, up from $42 million in 2016, Momentum said.
Hundreds of security startups have sprouted in recent years, promising “next-generation” technologies to fight cyber criminals, government spies and hacker activists, who have plagued some of the world’s biggest corporations.
Many of the younger companies have struggled to stand out from the crowd and increase revenue on a sustainable basis since sophisticated cyber attacks can make software obsolete very quickly. This makes the market ripe for consolidation, according to DeWalt.
Reporting by Liana B. Baker in San Francisco; Editing by Matthew Lewis