STG Closes $1.2B FireEye Buy, Merges It With McAfee Enterprise
‘We need to get back to innovating, we need to get back to investing ... I think that’s going to help us get back to growth and growing much faster than we have over the last couple years,’ CEO Bryan Palma tells CRN.
Symphony Technology Group has completed its $1.2 billion acquisition of FireEye and has combined it with the McAfee Enterprise business to create a cybersecurity titan.
The McAfee Enterprise-FireEye combination will be one of the largest pure-play enterprise cybersecurity companies in the world, with more than 5,000 employees, 40,000 customers and nearly $2 billion in revenue. The makes the joint company bigger than everyone except network security behemoths Palo Alto Networks, Fortinet and Check Point. Former Cisco SVP Bryan Palma (pictured) will led the combined company.
“We need to get back to innovating, we need to get back to investing,” Palma told CRN. “I think we can be much more focused now as a true software company. We‘re obviously going to be pivoting to delivery in the cloud, and to artificial intelligence and automation. And I think that’s going to help us get back to growth and growing much faster than we have over the last couple years.”
Palma said decisions will be made in the coming quarter about whether the combined company will be called FireEye going forward or adopt a new name. STG obtained rights to the FireEye name as part of its acquisition of the products business, but the McAfee name remains with the company’s $1.56 billion consumer business. The private equity firm closed its $4 billion acquisition of McAfee Enterprise in July.
One of Palma’s biggest challenges will be jumpstarting stagnant sales for both the McAfee Enterprise and FireEye Products businesses. Net revenue for McAfee Enterprise in the fiscal year ended Dec. 26, 2020, inched ahead to $1.35 billion, up just 1.2 percent from $1.33 billion a year earlier, while FireEye’s product revenue fell to $540.9 million in 2020, down 3 percent from $557.8 million a year earlier.
“The security space has overall market growth of 16 percent,” Palma said. “There‘s a lot of momentum out there and we’ve got to get back and capture that as we move forward.”
The combined FireEye-McAfee business will be focused on two speedboats going forward, Palma said: extended detection and response (XDR) and secure access service edge (SASE). The company’s XDR offering will combine the FireEye Helix SIEM platform, endpoint detection and response (EDR) and email security tools with McAfee’s endpoint protection, network security and data loss prevention offerings.
The joint company’s SASE offering, meanwhile, will leverage McAfee Enterprise’s expertise around data loss prevention, secure web gateway and cloud access security broker, Palma said. McAfee’s Enterprise Security Manager is a more traditional SIEM tool, and while no decisions have been about the fate of overlapping products, Palma said the company wants to be cloud-first and cloud native going forward.
“Our customers are looking for a simpler footprint, they‘re looking to consolidate those cybersecurity partners that they use,” Palma said. “By the two companies coming together, we’ve got a great portfolio with a lot of synergy. It just helps our customers go deeper with the company and our capabilities.”
From a channel perspective, Palma said the FireEye products business will benefit from not being part of an organization that also sells consulting and managed services that compete directly with offerings from solution providers. Up until now, FireEye’s products sat alongside the Mandiant consulting and incident response portfolio, which is almost entirely sold direct.
The joint FireEye-McAfee Enterprise doesn’t plan to be in the services business at all going forward, according to Palma, which will allow solution providers to capture adjacent consulting and managed services opportunities all for themselves. This will differentiate the company from other security technology vendors like CrowdStrike who also have extensive services businesses.
Palma said he plans to make the McAfee Enterprise and FireEye technology more accessible to managed security service providers (MSSPs) by building out multi-tenant capabilities. He expects the FireEye and McAfee Enterprise partner programs to be brought together into a single, global channel program at some point in 2022.
“We have a lot more we can do in the channel and I‘m going to be very focused on creating a strong relationship with the channel,” Palma said. “Now that we don’t have within our own company our own consulting and our own managed services, I think we’re going to have a lot more opportunities to work closer with the channel.”