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With its agreement to be acquired by private equity firm Thoma Bravo for $6.9 billion, SailPoint will have the opportunity to “potentially go faster and even more aggressive” in its expansion within the enterprise identity security space, potentially through of his own M&A activity, CEO Mark McClain told VentureBeat.
The deal comes as research firm MarketsandMarkets forecasts identity and access management (IAM) spending to rise to $25.6 billion by 2027, up from an expected $13.4 billion this year.
In an interview Monday, McClain said the planned acquisition by Thoma Bravo could allow SailPoint to do more to acquire other providers, as well as accelerate its internal development of new capabilities. “They do see…both organic and inorganic growth opportunities,” he said.
“We have places where we know we can build and develop additional capabilities and launch products or expand our product offerings,” McClain said. “But we also see opportunities all around us, to potentially accelerate part of our vision through a potential acquisition.”
While SailPoint has made “small” acquisitions in recent years, “potentially now we can do them faster or on a larger scale.” And that’s part of the attraction,” he said. “The speed and scale at which we can do some of that, as a mid-cap company, is different than when we have a parent company with a very deep checkbook.”
Ultimately, “I think their vision of SailPoint is as a core platform that is of interest to the business — a security platform that they can build other things on to build an even more strategic relationship with the customer,” McClain said.
SailPoint’s platform focuses on managing the access that people, both employees and contractors, have to the core systems used by the company. Today, however, workers are increasingly accessing cloud environments and software-as-a-service (SaaS) applications, which are not necessarily managed by the company, McClain said.
And companies now have to worry about more than just human identities, as machine identities now need to be protected as well, he said. A study commissioned by One Identity suggests that almost all organizations, 95%, report challenges in managing digital identity.
The wide reach of identity today is “just incredibly difficult for companies to keep their arms around,” McClain said. “That is the opportunity for us. They are all identities, and increasingly non-human identities, that access [more than] just their traditional core systems.”
By going private, SailPoint “gains an influx of cash and also more potential freedom to innovate,” Henrique Teixeira, senior research director at Gartner, said in an email.
And this ability to expand its capabilities will be critical, as identity security technologies are increasingly converging, Teixeira said.
IAM offerings that provide converged capabilities are growing in popularity because they provide a greater variety of solutions on one platform, along with easier adoption, he said.
In this regard, it is notable that Thoma Bravo also supports other identity security companies, Teixeira said. “SailPoint’s privatization could give them more freedom to work in an alliance that converges IGA (identity governance and administration) and privileged access management (PAM), for example,” he said.
Thoma Bravo is also very familiar with SailPoint, as the private equity firm was the majority investor in the provider prior to its 2017 IPO.
In addition to increased financial resources, Thoma Bravo’s acquisition of SailPoint also “potentially frees them up” by reducing some of the requirements public companies have, said Merritt Maxim, vice president and director of research at Forrester.
This could amount to making more acquisitions or investing more in product development, without worrying about scrutiny in public markets, Maxim said.
In particular, the price of the acquisition, which is scheduled to close in the second half of the year, represents a nearly 32% premium to SailPoint’s closing stock price on Friday. It’s also 48% above the company’s 90-day volume-weighted average price, according to SailPoint.
Thoma Bravo “certainly offered a fairly large premium over the share price,” Maxim said. “So they clearly see the value and advantage in SailPoint… This was not a forced sale, it was a strategic sale.”
This premium is another indicator of the great opportunity that lies ahead in the identity security market, where SailPoint is among the more established players. McClain, who co-founded the company in 2005, says the past few decades have seen companies view security “through the lens of the data, through the lens of the network, through the lens of the endpoint.”
“There have been great companies built around those diverse ways of seeing [security in] the company,” McClain said. “But really, the concept of security through the lens of identity is a fairly new concept. Companies haven’t really focused there before.”
However, the move away from the corporate network and the widespread use of cloud-based systems, accelerated by the pandemic and work-from-home, has forced companies to start focusing more on identity, he said.
While companies may no longer control the network, they do have an opportunity to control identity, McClain said.
“We know who the people or things are that are supposed to be touching our systems and data,” he said. “And that’s a new motivating concept that hasn’t really existed.”
In fact, Teixeira said that the concept of “identity first in security” will be very crucial in the future, since it puts identity at the center of how a company designs its security architecture.
And since web-based approaches are no longer enough, he said, “the importance of identity-first security is growing.”
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