The sale of managed detection and response vendor Trustwave by Singapore-based telecom conglomerate Singtel to The Chertoff Group affiliate MC2 Security Fund for $205 million marks a significant loss in value for Singtel, which first acquired a 98% stake in Trustwave in 2015 for $770 million. This means that Trustwave lost nearly 75% of its value during the eight years of Singtel’s ownership. The sale is expected to close by the end of 2023.
Singtel’s decision to sell Trustwave is part of a larger effort to refocus its business in the Asia-Pacific region and improve shareholder value by reallocating resources more effectively. Singtel attributed the decline in Trustwave’s value to economic shocks resulting from the COVID-19 pandemic, which impacted the company’s ability to scale.
Trustwave’s CEO, Eric Harmon, expressed excitement about the sale but stated that more information would be provided when the deal closes later this year. The sale comes after Trustwave underwent a strategic review process, during which it divested its legacy payment card industry compliance business to Sysnet Global Systems for $80 million in order to focus more on managed detection and response (MDR) services.
Trustwave experienced a significant reduction in its workforce during the strategic review process, with the company’s headcount falling by over 16% from April 2021 to September 2023. Currently, over 60% of Trustwave’s employees are based in the U.S., while the remainder are distributed across Australia, the U.K., Canada, Israel, India, and Germany. The company’s workforce composition is primarily focused on engineering (45%), followed by sales (30%), operations (20%), and human resources (5%).
Trustwave is estimated to generate approximately $322.4 million in annual recurring revenue, with a valuation between $164 million and $222 million based on funding and revenue data. The company was recognized by Forrester as a leader in global managed security service providers, ranking second behind IBM Security Services. However, Forrester noted that Trustwave could improve its remediation support services and provide more thorough information to customers.
The Chertoff Group affiliate MC2 Security Fund’s acquisition of Trustwave aligns with its broader investment strategy in cybersecurity, defense technology, government services, and homeland security. MC2 is the investment arm of The Chertoff Group, which was co-founded by former Homeland Security Secretary Michael Chertoff in 2009. The Chertoff Group has made several investments in these sectors in recent years, including digital transformation vendor DMI, data protection firm Virtru, and autonomous maritime surveillance vendor ThayerMahan.
Michael Chertoff, executive chairman of The Chertoff Group, sees a significant opportunity for trusted data format (TDF) in government, particularly in secure collaboration with mission partners. Chertoff’s extensive experience in the cybersecurity and homeland security sectors positions MC2 to contribute valuable expertise and support to Trustwave as it continues to grow and evolve its services.
Overall, the sale of Trustwave to MC2 Security Fund represents a significant milestone in Singtel’s effort to refocus its business and optimize resource allocation. The acquisition by The Chertoff Group affiliate provides Trustwave with new investment and growth opportunities, further solidifying its position as a leader in the managed detection and response market.