IoT security company Forescout Technologies says it has agreed to be acquired by private equity firm Advent International in a deal valued at $1.9B
Context & Ripple Effects
Forescout's path to this deal runs through a persistent valuation gap: the company priced its IPO at $22/share in late 2017, raising ~$116M at roughly $800M — below the $1B valuation from its 2016 Wellington-led private round — and spent the following years building out industrial IoT security via the $113M SecurityMatters acquisition.
Advent International has been assembling exactly this kind of asset: the firm agreed to take private Canadian payments company Nuvei for $6.3B and Israeli insurance software maker Sapiens for $2.5B, competed with Bain Capital and EQT for Japanese cybersecurity firm Trend Micro, and bid for Swiss chipmaker U-blox — making Forescout another listed security/payments-adjacent name folded into its portfolio.
First-order effects
- Forescout shareholders get a cash exit at $1.9B — more than double the company's ~$800M IPO valuation — while the IoT security vendor leaves the Nasdaq and becomes an Advent portfolio company alongside Nuvei and Sapiens.
- The deal puts Advent in direct competition with Bain Capital and EQT, which were separately circling Trend Micro, for control of cybersecurity assets.
Second-order effects
- Rival IoT and OT security vendors become more attractive targets as private equity demonstrates willingness to pay above public-market prices for the category, pressuring boards at comparable listed security firms.
- Deal-completion risk is real: when Advent ultimately pulled out of the agreement, Forescout sued the firm to enforce the deal — showing how take-private agreements in volatile markets convert signing announcements into litigation exposure.
Third-order effects
- If the pattern holds, public equity markets structurally underprice niche security vendors relative to private buyers, pushing the sector toward PE ownership and shrinking the pool of independent listed cybersecurity companies.
- Consolidation around well-capitalized private owners like Advent reshapes competitive dynamics in IoT security, where scale of capital rather than public-market discipline increasingly determines which platforms survive.
The trend: Cybersecurity vendors that IPO'd below their private-market valuations are being taken private by PE firms rolling up IoT and OT security into consolidated portfolios.