Growing threats are triggering sharp increases in mergers and acquisitions (M&A) activity in the global cyber security market. Deal values have increased six-fold in the last year, with the US accounting for over half of all M&A activity.
Meanwhile, the Top Ten deals only feature UK and US companies.
Across the board, global cyber security spending on deals is expected to reach $60 billion in 2011 and is forecast to grow at 10% every year during the next three-to-five years. UK cyber security spending is expected to reach nearly GB pound 3 billion by the time 2011 closes.
The report – entitled ‘PwC Cyber Security M&A: decoding deals in the global cyber security industry’ shows that 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 and representing a 70% increase compared to full year 2010.
Since 2008, the total investment in global cyber security deals has exceeded $22 billion, in turn representing an average of over $6 billion in each year.
As stated, the Top 10 deals over the last three years feature only UK and US companies. The US accounts for more than half of all deals globally triggered by growing cyber threats and increasing awareness among both organisations and consumers of accelerating breaches and attacks.
Fragmented market, attractive outlook
Barry Jaber, PwC’s UK-based security industry leader, said: “Deal activity in cyber security is expected to continue to grow given the fragmentation of the market and the attractive growth outlook. Technology and IT companies are making acquisitions to differentiate their offerings, while defence firms continue to do deals to diversify away from shrinking defence budgets.”
In most regions, the private sector accounts for the majority of cyber security spending. The US is the notable exception, where Government spending is almost equal to the private sector.
The strong US technology industry combined with the fact that the US defence and intelligence budgets are significantly larger than in any other country are key market drivers.
By comparison, Europe accounted for approximately a quarter of deal value and a third of deal volume over the same period.
Jaber added: “Growing threats and awareness, and changes in technology such as mobile devices and cloud computing are key drivers of spending growth in the cyber security market. This will underpin future deal activity.”
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 organisations and consumers of the threats and potential threats
- changes in technology driving the product and service innovation of security solutions
- increasing regulation (particularly those laws enforcing the requirement to secure personal data)
- changes in outsourcing: some organisations are increasingly relying on partners for security while others are growing internal security spending to maintain greater levels of control)
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