Expect M&A uptick in cybersecurity market, says Arctic Wolf boss
The boss of one of the world’s biggest cybersecurity companies has said he expects a surge in M&A activity in the sector in 2024.
Nick Schneider, the chief executive of Arctic Wolf, which is valued at $4.3bn, told City PM that many potential buyers are “opportunistically” scouring the market.
The firm recently shelved its own plans to go public, saying it will wait until market conditions have improved.
“For many companies, an IPO is no longer reasonable, or reasonable within a time frame, and an alternative to raising money would be to have an exit through acquisition. So I think you’ll see a lot more activity [like that] in the tech sector this coming year as a result,” explained Schneider, who has led the company since 2021.
For now, Schneider said the company is redirecting its focus on its global expansion.
“We’ll continue to scale globally by expanding the geographies that we’re selling into,” Schneider said. “We’re continuing to grow EMEA, we added ANZ about a year ago and we’ll continue to invest there as well as adding new products and services.”
In the UK, Arctic Wolf will grow its existing office in Newcastle, which currently houses around 50 staff. Opened in 2022, the company chose to base its EMEA operations out of the city because of a better talent pool.
“There are good universities up there to recruit from and sometimes it’s easier to get talent in a slightly smaller market than in a massive market like London, especially as you are opening in a new region,” Schneider explained.
The expansion comes as the business is aligning with an increase in demand for cybersecurity services. Businesses are fretting about a rise in cyberattacks, fuelled by the increasing availability of artificial intelligence (AI) tools.
“I think cybersecurity is top of mind for almost every business at this point,” said Schneider. He warned that the inflection point with AI and an increase in attacks over the last year “might catch some businesses off guard” if they are not paying enough attention though.
The Minnesota-based boss has noticed an uptick in phishing activity. He pointed out that phishing emails can now closely resemble legitimate ones, making detection much harder.
Last year, the number of cyber breaches globally nearly doubled, Schneider said. “The advancement of AI definitely helped escalate that.”