LevelBlue to acquire Cybereason in latest cybersecurity industry consolidation
LevelBlue announced Tuesday it has signed a definitive agreement to acquire Cybereason, a Boston-based cybersecurity firm specializing in extended detection and response platforms and digital forensics.
Dallas-based LevelBlue, a managed security services provider formerly known as AT&T Cybersecurity, will fold Cyberreason’s extended detection and response (XDR) platform, threat intelligence team, and digital forensics and incident response (DFIR) capabilities into its managed detection and response (MDR) offerings.
“The addition of Cybereason is a strategic leap forward in our mission to become the most complete cybersecurity partner for our clients and strategic partners,” Bob McCullen, CEO and chairman of LevelBlue, said in a release. “By combining Cybereason’s world-class XDR and DFIR capabilities with our AI-powered MDR and incident response, we can deliver unified protection that’s proactive, scalable, and purpose-built for today’s fast-evolving threats.”
The acquisition follows a trend of industry consolidation, as cybersecurity companies aim to offer a variety of products and services under singular brands. Cybereason merged with managed service provider Trustwave earlier this year.
For Cybereason, the acquisition bookends a turbulent seven-year period that saw the company swing from near-IPO status to dramatic valuation declines and multiple restructurings. Founded in 2012 by former members of the Israeli Defense Forces signals intelligence unit, the company competes with firms like CrowdStrike and SentinelOne in providing endpoint detection services and threat intelligence capabilities.
Cybereason appeared to reach its apex in 2021, when it raised $325 million in a funding round led by Liberty Strategic Capital. That round valued the company at approximately $3.1 billion, and Cybereason confidentially filed for an initial public offering with an expected valuation of $5 billion. At its peak, the company employed roughly 1,500 workers and had raised $850 million in total funding, with Japanese multinational investment holding company SoftBank as its primary investor.
However, the economic downturn of 2022 fundamentally altered the company’s trajectory. The shifting market conditions, combined with pressure from SoftBank following its significant losses on investment in WeWork, forced Cybereason to acknowledge it had over-hired at unsustainable wage levels. The company conducted two major rounds of layoffs, cutting more than 300 employees. In early 2022, Cybereason eliminated approximately 10% of its workforce, citing what it called a “seismic shift” in private and public markets. The IPO was eventually scrapped.
As part of Tuesday’s announced transaction, SoftBank Corp. and Liberty Strategic Capital will become investors in LevelBlue. Additionally, Steven Mnuchin, former U.S. Treasury secretary and managing partner of Liberty Strategic Capital, will join LevelBlue’s board of directors.
