Highlights:

  • The Exabeam LogRhythm merger is being promoted as a way for customers of both companies to benefit from increased research and development investments, enhanced product innovation, expanded service and support coverage, and access to a more extensive AI-driven product portfolio.
  • Palo Alto Networks CEO Nikesh Arora emphasized the necessity of the IBM-Palo Alto deal to bolster their competitive stance against Splunk Inc., which Cisco Systems Inc. acquired in March for a sum of USD 28 billion.

Security intelligence and management solutions startup Exabeam Inc. and security intelligence firm LogRhythm Inc. are set to merge, aiming to create a company that leverages its strengths to deliver artificial intelligence-driven security operations.

The Exabeam LogRhythm merger is being promoted as a way for customers of both companies to benefit from increased research and development investments, enhanced product innovation, expanded service and support coverage, and access to a more extensive AI-driven product portfolio.

This merger also indicates that established cybersecurity companies face pressure as new technologies and startups emerge, capturing a larger share of enterprise security budgets. Despite ongoing mergers and acquisitions in cybersecurity and the rise of major platforms such as Palo Alto Networks Inc., CrowdStrike Holdings Inc., and Zscaler Inc., there is still little indication that the industry is consolidating to fewer suppliers overall.

According to LogRhythm’s CEO, Chris O’Malley, “Together, our expertise and shared strategic vision will accelerate innovative AI-driven cybersecurity solutions for customers around the world. With more than 20 years of best-in-class SIEM and UEBA experience in serving thousands of worldwide customers, we are poised to create a new employee-inspired organization that encapsulates the absolute best of what we both offer.”

The terms of the Exabeam LogRhythm merger were not disclosed. The transaction is expected to close in the third quarter, pending regulatory approvals and customary closing conditions.

LogRhythm has been majority-owned by private equity firm Thoma Bravo since 2018, and Thoma Bravo is likely facilitating the merger. Exabeam has raised USD 390 million in venture capital funding, including a USD 200 million round at a USD 2.4 billion valuation in June 2021.

Investors in Exabeam include Blue Owl Capital Inc., Acrew Capital Partners LLC, Lightspeed Venture Partners, and Norwest Venture Partners.

Founded in 2013, Exabeam specializes in providing security intelligence and management solutions. Their Security Intelligence Platform harnesses the power of machine learning to deliver advanced analytics and automated incident responses, all while offering fixed pricing for unlimited data.

Founded in 2003, LogRhythm offers advanced Security Information and Event Management (SIEM) solutions designed to analyze, detect, and respond to cybersecurity threats. Their platform integrates machine learning, user and entity behavior analytics, and security orchestration, automation, and response (SOAR) to streamline security operations and strengthen threat detection and mitigation capabilities.

The merger announcement follows Palo Alto Networks Inc. and IBM Corp.’s new partnership, where Palo Alto Networks will acquire IBM’s QRadar software-as-a-service assets. This positions Palo Alto Networks as IBM’s preferred cybersecurity partner across network, cloud, and security operation centers.

Palo Alto Networks CEO Nikesh Arora emphasized the necessity of the IBM-Palo Alto deal to bolster their competitive stance against Splunk Inc., which Cisco Systems Inc. acquired in March for a sum of USD 28 billion.

If the trend isn’t clear, the LogRhythm and Exabeam merger, along with the Palo Alto IBM deal and Cisco’s acquisition of Splunk, among other recent M&A activity, all indicate one thing: the era of cybersecurity consolidation appears to be here, even if it doesn’t necessarily lead to a decrease in the number of companies overall.

Over the past two decades, countless security startups have emerged, each bringing innovative ideas to the market. However, the sheer volume of options can overwhelm typical customers, who find it challenging to select and manage from among them all. Security industry consolidation addresses this challenge by establishing larger, comprehensive companies that offer a wide range of security services under one roof. This is also the underlying objective of the Exabeam LogRhythm merger, even though most enterprises do not intend to decrease their number of cybersecurity supplies.

“As a combined organization, we will continue to push the envelope of security operations innovation with solutions that bring AI, automation, SIEM, security analytics and UEBA together to deliver a holistic approach to combating cyber threats,” stated Adam Geller, CEO of Exabeam.