Key Trends Defining Data Privacy Dealmaking

The COVID-19 pandemic has presented novel challenges to email and data security and access management, accelerating extant enterprise concerns ranging from credential theft and spoofing to phishing and click-jacking, as more employees operate in distributed working environments. This shift has not only made developers of videoconferencing and collaboration tools enticing acquisition targets, but the vendors behind data privacy & security platforms as well.

The scale of the shift to a distributed workforce has accelerated consolidation trends in this space, however, as incumbents look to purchase companies that can patch existing privacy and security infrastructure. Dealmaking trends in this space reveal that the underlying driver of consolidation remains the search for greater scope, not merely scale, as enterprises expand and strengthen product and service offerings in privacy & security via M&A.

“COVID-19 will give rise to initiatives that will allow expanded access to data... Everyone has to be wary of the consequences of collecting this kind of data.”

Alex Levinger, Vice President of Legal International, DFIN

And the dealmaking has been vigorous. The aggregate deal value of M&A activity in the realm of data privacy has expanded at a compound annual growth rate of 5.3% over the past decade to reach $19.0 billion globally in 2019 on a CAGR of 14.3% for completed deals. In that time, dealmaking has generated $122.9 billion in total value across 755 transactions for annual averages of $12.3 billion across close to 76 acquisitions. That puts this year’s performance to date into stark focus: M&A activity in data privacy has already produced a staggering $8.3 billion in value across 69 closed deals.

The urgency of the pandemic has propelled VC-backed exits in data privacy to a combined 24 transactions. It is clear venture investment into this space represents a vital component of innovation, with VC-backed exits representing roughly a third of all value and volume generated by M&A activity thus far this year

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