US software investment firm Thoma Bravo on Friday (26 April) announced it has reached an agreement to buy London Stock Exchange-listed cybersecurity company Darktrace for £4.3bn, marking another private equity acquisition impacting the legal tech space.
Darktrace is a Cambridge-founded company which counts Brodies, Irwin Mitchell and Peters & Peters among its UK law firm clients, although its customers span industries from financial services to manufacturing to retail. Notoriously expensive but highly rated, it leverages AI to monitor people and digital assets across an organisation’s entire ecosystem.
If the acquisition receives the regulatory green light, it will bring an end to Darktrace’s association with Mike Lynch, who is on trial in the United States for alleged fraud over the £8.7bn sale of Autonomy to Hewlett-Packard. Lynch’s investment company Invoke Capital seeded Darktrace in 2013 and was instrumental in its early development. Lynch’s continued association with the company has caused investors angst as they say it has impacted the share price.
But while Darktrace will no longer be listed, or have shareholders to worry about, or have Mike Lynch affecting its share price, it is worth noting that Thoma Bravo has had its own share of troubling headlines over the past three years. Thoma Bravo and Silver Lake acquired SolarWinds in 2016 and, following the supply chain cyberattack that began in 2019, were accused in subsequent class action legal proceedings of “sacrificing cybersecurity to generate short term profits for its principal owners.” They strongly deny the claims.
Commenting on the acquisition of Darktrace, Andrew Almeida, a partner at Thoma Bravo, said: “Thoma Bravo has been investing exclusively in software for over twenty years and we will bring to bear the full range of our platform, operational expertise and deep experience of cybersecurity in supporting Darktrace’s growth.” You can find their very long list of investments here: https://www.thomabravo.com/companies
As a general observation, as more mission critical tech providers become private equity owned, it is more important than ever to understand their modus operandi and how they deliver continued value and security to the end user as well as increase their profit margins.
We’re looking at this topic in some detail and if you have thoughts and observations please contact caroline@legaltechnology.com or post your comments below.