Infosec services firms Accuvant and FishNet to merge

The union of fierce rivals Accuvant and FishNet promises to combine two of the largest vendors offering information security services and consulting in the U.S.

Two of the largest players in information security services and consulting, Accuvant Inc. and FishNet Security Inc., announced merger plans Wednesday. Financial details of the merger, set to be completed during the first quarter of 2015, have not been made available at this time.

The new, as-yet-unnamed firm will feature more than 1,400 employees, with more than half of those considered engineers and consultants, as well as 60 locations across the U.S. and Canada. Accuvant CEO Dan Burns will head up the new outfit, while FishNet CEO Rich Fennessy will continue as an advisor to assist with the merger.

A statement posted on the two firms' respective websites said that private equity firm Blackstone Group L.P.  acquired the Denver-based Accuvant earlier this year, and will be retaining the majority stake in the new company. The announcement did not clarify whether Investcorp, which acquired FishNet in 2013, would still play a role in the venture.

Both Burns and Fennessy said in the statement that the move will combine two vendors that have already been operating largely along the same lines, with the promise that the new company will deliver increased resources to current clients.

"The coming together of Accuvant and FishNet Security is entirely about growth and transformation -- about joining two respected companies and continuing to evolve the new, combined entity to better meet our customers' needs," said Burns. "The leadership of both companies realized that we had been trying to solve many of the same problems for our customers, but in slightly different ways. When we put the two companies together, we will add strength to our similarities and options with our diversity, creating more value for our customers."

"Together, FishNet Security and Accuvant will be better positioned to provide holistic, high-value, and integrated security solutions that cover all aspects of cyber defense," said Fennessy. "We believe that we will be able to accelerate innovation and help customers to more adequately address information security concerns."

Indeed, unlike other recent acquisitions within the security industry that were meant to expanding offerings, the deal between FishNet and Accuvant seems to reinforce the companies' current strengths: reselling and implementing security technologies from other vendors, and providing extensive consultation services dealing with compliance regulations, security strategies and more.

Todd DeBell, vice president of North American channel sales for security intelligence vendor FireMon Inc., based in Overland Park, Kansas, said he expects the merger between FishNet and Accuvant, the vendor's two largest partners in North America, to be beneficial for customers.

"Surprisingly, there is very little territorial competitive overlap of these two companies from our perspective," said DeBell. "So we view the news as very complementary."

As both companies are private, the size of the combined entity is difficult to estimate. Analysis conducted this year by research firm Gartner Inc. showed that neither FishNet nor Accuvant landed in the top 10 largest information security consultancy firms worldwide.

Accuvant's security consulting revenue was estimated to be $54.4 million in 2013, growing 8.8% from the previous year. FishNet, which itself acquired smaller network and infrastructure security consultancy TorreyPoint last year, took in an estimated $103 million in consulting revenue during the same period, representing 9.6% year-over-year growth. By comparison, consulting giant Deloitte LLP generated $1.9 billion in security-related revenue alone.

Still, Gartner's analysis indicated that the security consulting market is still growing at a steady clip, with the top 10 vendors accounting for only 63.9% of the market. Such a highly segmented space may be ripe for further deals in the future.

"Information security consultants are fortifying or launching their information security consulting practices to meet hyped-up demand by either organically growing or acquiring capabilities in terms of security tools, information security intelligence technology or expert resources, such as hackers, computing information forensics investigators or business risk management capabilities," said Gartner analysts Jacqueline Heng and Lawrence Pingree in their report.

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How will the merger of Accuvant and FishNet affect the security solution provider market?