Cybersecurity’s Big Bet: Inside Thoma Bravo’s $12B Proofpoint Takeover
Deal Overview
On April 26, 2021, private equity firm Thoma Bravo announced that it had agreed to acquire Proofpoint, a leading cybersecurity company, in an all-cash transaction valued at approximately $12.3 billion. This acquisition marked one of the largest cybersecurity buyouts in history and underscored the growing importance of cybersecurity solutions in an increasingly digital world.
Acquirer: Thoma Bravo Target: Proofpoint
Total Transaction Size: $12.3B Closed Date: August 31, 2021
Company Details: Acquirer – Thoma Bravo
Thoma Bravo is a leading private equity investment firm with a focus on software and technology-enabled services. Founded in 1980, Thoma Bravo has established a reputation for acquiring and scaling enterprise software companies, with over $120 billion in assets under management as of 2021. The firm has successfully executed multiple high-profile buyouts in cybersecurity, including acquisitions of Barracuda Networks, Sophos, and Veracode. It has completed a total of approximately 520 software companies and currently manages a portfolio of over 75 software companies. This makes it an experienced player that is well positioned to acquire and then grow software companies with a high capacity for growth. It manages approximately $47 billion just within cybersecurity as of 2024.
Founded: 1980
Managing Partner: Orlando Bravo
Assets Under Management: $179B (2024)
Company Details: Target – Proofpoint
Proofpoint is a leading cybersecurity and compliance company that provides solutions to protect organizations from advanced threats, compliance risks, and digital fraud. The company specializes in email security, data loss prevention, and threat intelligence, serving more than half of the Fortune 1000 companies. Initially it offered software designed to cut down on the amount of spam email that was getting through using proprietary machine learning algorithms before expanding out into cyberattack prevention and regulatory compliance software.
Founded: 2002
CEO: Gary Steele (at the time of acquisition) LTM Revenue: $1.05B (2020)
LTM EBITDA: $220M (2021)
Motivation
Thoma Bravo’s acquisition of Proofpoint was driven by several key factors:
Expanding Cybersecurity Portfolio: Thoma Bravo has been actively consolidating the cybersecurity market, and Proofpoint’s suite of cloud-based security solutions complemented its existing investments.
Growing Cybersecurity Market: With increasing cyber threats, the demand for enterprise security solutions was at an all-time high. Proofpoint’s leading position in email security and threat protection made it a prime target for acquisition.
Go-Private Strategy: Thoma Bravo aimed to take Proofpoint private to focus on long- term growth strategies without the short-term pressures of public markets. This provided Proofpoint with greater flexibility to innovate and expand as well as take risks without the threat of market backlash.
Operational and Revenue Expansion: Thoma Bravo planned to leverage its expertise in optimizing software companies to drive profitability and market expansion for Proofpoint.
“Proofpoint has established itself as a true powerhouse in the cybersecurity sector due to its innovative suite of market-leading products and impressive customer base of leading companies around the world,” - Chip Virnig, Partner at Thoma Bravo
Integration
Following the acquisition, Proofpoint was delisted from the NASDAQ and became a privately held company under Thoma Bravo’s ownership. CEO Gary Steele transitioned to Splunk in 2022, and Ashan Willy was appointed as the new CEO of Proofpoint.
Thoma Bravo focused on enhancing Proofpoint’s cloud-based security offerings and expanding its global presence. The firm also sought to streamline Proofpoint’s operations to drive efficiency and accelerate product innovation.
Outcome
Since the acquisition, Proofpoint has continued to strengthen its cybersecurity platform, introducing new AI-driven threat detection capabilities and expanding its managed security services. Under Thoma Bravo’s ownership, the company has made strategic investments in R&D and acquisitions to bolster its leadership in cybersecurity.
The deal also reinforced Thoma Bravo’s dominance in the cybersecurity space, demonstrating its ability to successfully scale and optimize technology firms. This acquisition also helped contribute to their sponsorship of CyberConsortium which aims to create a community of cybersecurity experts to “promote and advance the cybersecurity industry”.
The House View
In our view, Thoma Bravo’s acquisition of Proofpoint exemplifies a well-executed private equity strategy in the technology sector. The deal provided Proofpoint with the necessary resources and flexibility to innovate while allowing Thoma Bravo to further consolidate its position in the cybersecurity market. The acquisition also highlighted the increasing investor appetite for cybersecurity firms, as digital threats continue to grow in sophistication and frequency.
Thoma Bravo’s proven track record in acquiring and scaling software companies suggests that Proofpoint will continue to thrive under its stewardship, further cementing its role as a key player in the cybersecurity landscape.