Tim Mueller’s Transaction Analysis: New IT M&A Deals Dec. 13

Optiv to be Acquired by KKR

Financial Information*

Enterprise Value: $1.8- $1.9 billion

EV/LTM EBITDA: 1 – 13x

Transaction Facts

Private equity investor KKR (NYSE: KKR) announced recently that it was acquiring security solution provider Optiv, Inc. from fellow private equity giant The Blackstone Group (NYSE: BX). Blackstone and other investors would retain a minority stake in the business.

Financial information was not disclosed, but media sources listed the deal as close to $2 billion in value.

The transaction comes shortly after Optiv filed a Form S-1 with the SEC regarding a potential IPO on the New York Stock Exchange, where it would be listed under the ticker OPTV. In the filing, Optiv reported more than $947.3 million of revenue for 2015 and adjusted EBITDA for the same period of $97.5 million.

Leveraging Substantial Resources for Continued Growth

Following the Pattern: Optiv is today a major player in the security solutions space, due in large part to significant private equity involvement and investment. The company was initially formed through the combination of Accuvant and FishNet in early 2015, facilitated by Accuvant owner Blackstone as well as funding partners including former majority owner Sverica International and FishNet investor Investcorp.

Building Up and Building Out: Blackstone grew Optiv through a series of acquisitions, which KKR is set to continue doing using its own substantial resources. Expect Optiv to enhance its existing global presence, moving beyond its current model where it is heavily dependent on partnerships.

Focus on the Platform: By becoming a go-to global security platform, Optiv has the potential to create significant value and transform its role in the supply chain. KKR’s operational expertise and ability to aggregate customers will be key to this success.

A More Familiar Sight: When Optiv disclosed its IPO plans (and was followed in doing so by Presidio), there was much discussion regarding whether it was a sign that the historically weak IPO market was facing a rebound. Though it’s unclear whether the upcoming IPO has been canceled with this sale, acquisition by a new private equity partner is a much more familiar outcome in today’s business climate.

For more information about this transaction, click here to read the press release.

Tim Mueller was not the adviser in this transaction.

*Financial information was not disclosed, but media reports citing sources close to the transaction pegged the value at $1.8 – $1.9 billion or 11 – 13x EBITDA estimates.

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