My former client Hewlett Packard Enterprise is acquiring my former employer Juniper Networks with investment banking advice from another one of my former employers, J.P. Morgan, amongst others.
While marketing (and a lot of the reporting) focuses on AI as being a big driver of the transaction, I believe this deal is a lot more about consolidation for scale and competition than just Juniper’s Mist AI asset. The pool of data center tech stack vendors has been shrinkingand Juniper was unlikely to see significant growth despite its recent enterprise momentum.
As a first year associate at Jefferies I was asked by one of my Managing Directors to suggest a potential big idea for Juniper that he could pitch in an upcoming meeting. I thought some and said they should go acquire fast growing switch vendor Arista Networks. If memory serves right, this was back in 2013, a year before Arista went public. My MD brushed off the suggestion saying Juniper will never be that bold. I don’t think he was wrong. Juniper had done a poor job of integrating and capitalizing on its acquisition of Netscreen for $4bn in 2004. The company’s subsequent M&A strategy had been rather muted, as Cisco kept building an empire with bold bets that delivered tremendous value to its stakeholders. In fact, a lot of Juniper’s cybersecurity team went over to Palo Alto Networksand built another behemoth while Juniper failed to seize another massive market opportunity that it was well-positioned to capitalize on. I could go on but the point is that Juniper ran fast to stay in the same place while many competitors went on to create much bigger and better businesses.
I hope HPE + Juniper will be greater than the sum of their parts, though it is clear there is much overlap, and some parts will have to be excised to achieve the $450mm annual run-rate synergies being promised by management.
ExtraHop Secures $100 Million Growth Capital
Potential IPO candidate and NDR vendor ExtraHop, has secured $100 million in growth capital from PE backers Bain Capital and Crosspoint Capital. The company is reporting a respectable ARR of approximately $200 million, doubling over the last few years. I’m not sure what “few” amounts to, perhaps 3-4 years? Note that the company was acquired by Bain and Crosspoint in June 2021 for $900 mm. The company closed out 2021 with $140 mm in ARR implying 20% annual growth – that’s not terrible but Bain and Crosspoint clearly seem to think there is potential to accelerate given all the management changes. In February 2022 Patrick Dennis took over as CEO from Arif Kareem, who had led the business since 2016. Patrick was then replaced by Crosspoint’s Greg Clark in October 2023. With this new round of growth capital, the company has added Marc Andrews as Chief Revenue Officer and Kanaiya Vasanias Chief Product Officer. Marc is an operating partner at Crosspoint and was formerly at Blue Coat Systems and Symantec. Kanaiya was formerly at Juniper and Infoblox.
Delinea Acquires Authomize
TPG backed Privileged Access Management (PAM) platform Delinea (which was the amalgamation of two distinct companies, Thycotic and Centrify) announced its acquisition of Authomize, now part of Delinea. Authomize provides a platform to defend against cybersecurity threats using the identity vector across clouds, SaaS applications and on-premises. The company was founded in Tel Aviv in early 2020 and had raised $22 mm from Tenable Ventures, Innovation Endeavors and M12, Microsoft’s Venture Fund.
The acquisition enhances Delinea’s Cloud Infrastructure Entitlement Management (CIEM) and Identity Threat Detection and Response (ITDR) capabilities on the Delinea Platform. Other related deals include Okta’s acquisition of Spera Security (covered here) in December 2023, Cisco’s acquisition of Oort in July 2023 and Proofpoint’s acquisition of Illusivein December 2022.
Harness Acquires Assets from Armory
Harness has acquired the assets of Spinnaker startup Armory. This wasn’t the best outcome – the company had raised at total of $82 mm since its founding in 2016. Backers included Insight Partners, Bain Capital Ventures and Crosslink Capital.
End Notes
I hear more buzz everyday that founders and boards need to get realistic on their valuation expectations. See this post by Altimeter‘s Jamin Ball. Expect more deals like the Harness / Armory transaction highlighted above in the next 12 months.
December CPI was higher than predicted. Don’t expect interest rates to go down in March, per my previouspost.
News of layoffs continues to trickle through. Google, Amazon (Twitch), Discord, Orca and Duolingo have all made announcementsjust this month.
JP Morgan reported its most profitable year ever despite big one-time charges in Q4. All the major banks took a hitto their earnings in the form of FDIC-charges due to the banking crisis that took down SVB, First Republic and Signature Bank.
Citi intends to lay off 20,000 workers over the next three years as it continues to streamline the bank.
My day job is advising growing companies on fundraising and M&A. If you are an investor or entrepreneur I’d love to connect.