Hackers’ activity stimulate purchasing of digital security companies

Antivirus giant McAfee is planning to acquire Solidcore, maker of security systems for ATMs and cash registers, for $33 million.

According to America's Growth Capital (AGC) 55 acquisitions of security firms are already made in 2009. Such a speed of making acquisitions can surpass the same in 2008, when 120 security companies were purchased. "There is a surge of activity going on," says Ben Howe, CEO at AGC.

It's not just limited to anti-virus giants McAfee, Symantec, Trend Micro, Sophos and CA. Tech giants Cisco, IBM, Oracle, EMC, Hewlett-Packard and even Google have been buying up smaller security firms, too.

Jay Beaghan, managing director for security acquisitions at Imperial Capital, commented that the market for initial public offerings has dried up, that is why security firms can no longer count on cashing in by going public. This is his explanation of price attractiveness in tech companies’ acquisitions.

"Hackers and bad guys continue to innovate," says Beaghan. "This supports an ongoing level of investment activity in the sector."  

Also there are high expectations in the tech-security, military and intelligence communities that the federal government will begin to spend more on cybersecurity. "The government is starting to better protect its own systems," says Amit Yoran, CEO of security firm NetWitness. "Ultimately, the mind-set that security matters will translate into new regulations and programs affecting private industry."

In such a way tech giants start have begun purchase small security firms in order to get a larger piece of a growing security pie. "It certainly is a buyer's market," says Rocky Pimentel, CFO of McAfee, which has spent about $2 billion on 16 other acquisitions since 2002.