MCI has acquired managed security services company NetSec for $105 million in cash.
The sale means pay-day for the team, including Silicon Valley venture capitalists Mobius Venture Captial and Arrowpath, that founded the outfit in 1998 and which has kept it in private hands until now. The company said it expected the deal to be completed in 30 days.
In an interesting twist, NetSec’s CEO Glenn Hazard confirmed that the company will be set up as a standalone division or subsidiary within MCI, and will retain its brand in some form going forward. He and his management team would remain in place, with the company structure intact, and his ability to direct the business unhindered.
"Think of it as a division. We will not be functionally integrated," said Hazard. If anything, NetSec might take onboard some of the "security assets" of MCI as it attempted to integrate telecoms and data security demands into a single entity. Not coincidentally, NetSec and its new owner MCI are both based in Virginia, a matter of miles away from one another, so executives won’t have far to drive for meetings.
Although it is not unusual for acquired companies to live on in name for a while, it is plausible that MCI may not want to swallow its acquisition 1990s-style. Security is a market highly sensitive to brand expertise and MCI’s may not have fitted with everyone. The "grand vision" school of vanity acquisitions has taken a few hard knocks in recent times, as MCI should well understand. Its former guise was as WorldCom (MCI having itself been earlier "merged"), a name now synonymous with unscrupulous, helter-skelter paper acquisition.
It is all a very different outlook from the acquisition spree telecoms companies embarked on in the late 1990s, when small, innovative companies routinely disappeared into bigger ones never to be seen again. Innovation tended to die, leaving the shareholders wondering why these outfits had been bought in the first place.
Hazard said the two companies had been in talks for some months about sealing a partnership but this had eventually turned into an acquisition discussion. "There were parts they needed to own and they believed it was strategic," he said.
Based out of a Virginia operations centre, NetSec sells its Finium suite of managed services, which it describes as [intergrating] "threat, vulnerability and event information via a centralised, secure Web Console, enabling analysts and managers to better manage security as part of their business."