FireEye Pays Through the Nose for Mandiant

FireEye just acquired Mandiant for a whopping Billion Dollars. FireEye is essentially an appliance vendor focused on malware detection, which is a pretty narrow field with a lot of open source competitors. They are not a SIEM company, they don’t sell firewalls, and they have limited endpoint visibility. Mandiant is a consulting company that has had some measures of success, especially in their own ability to hype themselves, and they have limited endpoint detection capabilities as well. However, neither of these companies had a significant market share in their spaces, and even combined, I don’t think they will have much market share. And for a Billion Dollars, I can’t help but feel that these two companies just grasped hands together and leaped off a giant fiscal cliff.

From the BBC here:

Cyber security company FireEye has acquired Mandiant, a firm known for responses to network breaches, in a deal worth more than $1bn .

Mandiant rose to prominence last year after it alleged that a secretive branch of China’s military had stolen data from more than 100 global firms.

The deal, one of the largest ones in the sector recently, comes amid increased worries over cyber security.

FireEye shares rose 24% in after hours trading in New York on the deal.

The companies said they had agreed the deal on 30 December, but only made it public on Thursday after close of US markets.

Kevin Mandia, Mandiant’s founder and chief executive officer prior to the acquisition, has been appointed as the chief operating officer of FireEye.

The acquisition of Mandiant involves purchasing the brains and talent behind their consulting practice. Know what happens when you make a bunch of road warriors, who spend weeks away from home working on network breaches, suddenly wealthy? Those guys walk, retire, or start their own ventures. The attrition usually starts within weeks from the buyout.