Cyber training firm KnowBe4 bought by private equity firm

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Barely 18 months after an initial public offering (IPO) valued it at $3.5bn (£3.13bn), cyber security training, phishing simulation and awareness specialist KnowBe4 is to be taken private after being acquired by private equity outfit Vista Equity Partners for $4.6bn.

Quietly announced on 12 October, the deal represents a 44% premium to KnowBe4’s closing price on 16 September 2022, the day prior to its receipt of Vista’s initial proposal, and is set to close during the first half of 2023, subject to the approval of shareholders and regulators. It will be financed through a combination of debt and equity financing.

KnowBe4 founder, chairman and chief executive officer Stu Sjouwerman said: “Today’s announcement is a testament to the success of our strategy and the strength of our incredible team. This acquisition by Vista represents the next phase of our journey.

“KnowBe4 has a strong record of performance, as evidenced by our market-leading platform and global customer base. Under Vista’s ownership, we will have access to additional resources and support, which will help us achieve our goals and deliver enhanced value to our customers. We look forward to partnering with Vista’s team to continue empowering businesses worldwide to strengthen their human firewall and make smarter security decisions every day.”

Michael Fosnaugh, co-head of Vista’s Flagship Fund and senior managing director, said: “As a trusted partner to enterprise software companies around the world, we make a point to invest in businesses that make a difference and have a demonstrated track record of success. We look forward to leveraging our deep understanding of the business to help Stu and his talented and experienced team address the human element of cyber security.”

“Under Vista’s ownership, we will have access to additional resources and support, which will help us achieve our goals and deliver enhanced value to our customers”
Stu Sjouwerman, KnowBe4

Vista managing director Rod Aliabadi added: “As a significant investor in KnowBe4, we could not be more excited to take this next step in our journey together. We have long appreciated the work that KnowBe4 does in strengthening the human layer of cyber security through educating employees on how to identify social engineering and related cyber threats.”

KnowBe4 has approximately 52,000 customers worldwide, who use its suite of products to “address the human element of security” by raising awareness of potential threats through innovative approaches to training exercises, many of them designed with the help of its chief hacking officer, cyber security pioneer and ex-black hat hacker Kevin Mitnick, who once spent eight months in solitary confinement in a US prison after a judge was successfully convinced he had the ability to launch a nuclear missile by whistling into a payphone handset.

One of its more high-profile offerings is its “Netflix-style” cyber security drama series, The Inside Man, produced by UK-based subsidiary Twist & Shout Communications, which takes the form of a techno-thriller charting the story of reformed cyber criminal Mark Shepherd and his ragtag team of security consultants, who foil cyber attacks while presenting actionable lessons on topics such as social engineering, password hygiene, social media security and more.

The show entered its fourth season earlier in 2022 with a storyline drawing inspiration from the 2021 Colonial Pipeline incident, and now has a small but dedicated fandom community.

Vista, for its part, has been splashing the cash in the tech sector this year, buying Citrix in February for $16.5bn alongside partners Evergreen Coast Capital Corporation, and merging its flagship digital workspace and application delivery suite with the intelligent data and analytics capabilities of Tibco, another recent acquisition. This process completed at the end of September 2022.

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