McAfee Buys Reconnex

On July 31, 2008, McAfee announced it will buy Reconnex. The deal closed on August 14, 2008.

Buyer McAfee Background
  • Current security offering consists of: virus and malware control, spam control, phishing and spyware control, surf control/URL filtering, and malicious web site protection
  • Along with Symantec and Trend, McAfee is one of the top tier anti-virus vendors. This business has been stable for several years
  • Does over $1B/year, mostly in virus control
  • Over the last five years, has extended its offering beyond anti-virus, with limited success. It’s been making renewed efforts over the last 12 months to grow the non-anti-virus side of its revenues. This acquisition is clearly part of these efforts

Seller Reconnex Background

  • Sells data leak prevention software, that scans inbound and outbound traffic
  • Founded in 2003
  • Vontu was main competitor. In 11/07, Symantec acquired Vontu for $370M. Vontu was three or four times larger than Reconnex; Ferris Research estimates Vontu’s revenue run rate at $30M when it was acquired

Buyer McAfee Benefits

  • McAfee’s current offering has limited data leak prevention, via user-defined policies. The acquisition substantially builds McAfee’s DLP capabilities. And thus help it build a broader security offering
  • Gets technology and engineering staff

Seller Reconnex Benefits

  • Gets access to McAfee much larger marketing capabilities
  • Gets cash needed to continue operations

Terms of Deal

  • $46M in cash

Other Ferris Research Comments

  • Sensible move by McAfee
  • Part of a general trend of rich but stable anti-virus firms seeking to build their security portfolio
  • Reconnex had effective marketing communications program; underlying sales were not commensurate

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David Ferris

One Comment

  1. dferris
    Posted August 4, 2008 at 10:33 AM | Permalink

    From Nick Mehta:

    Investors probably barely got $$$ back meaning employees likely didn’t make much if anything at all

    Even this many years in now, DLP seems to not be taking off – no one seems to be doing much real revenue in the space

    The others (e.g., Vericept) seem to be left without a chair

    Not sure what Mcafee’s previous DLP acquisition they made 2 years ago (I forget the name) is doing [DF note: That was Onigma]

  2. no name
    Posted August 4, 2008 at 9:34 PM | Permalink

    With this merger now, everyone from reconnex is now waiting for the future scope of their current products, new market, customers etc. How this DLP products gona integrate with the existing McAfee Products. As McAfee has very huge number of customers who are using McAfee’s security products, I think customers now may be waiting / showing their interests in the DLP products as well.

  3. no name
    Posted August 26, 2008 at 7:07 AM | Permalink

    Hi Dave,
    when is the transaction assessment report available and how much does it cost?
    Thanks.

  4. dferris
    Posted August 26, 2008 at 1:04 PM | Permalink

    The report is available now. See http://email-museum.com/?p=320941. It costs $2,495 and includes custom consulting, Thanks for your interest–David

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