Tripwire buys nCircle, a San Francisco network security company [The Oregonian, Portland, Ore.]
(Oregonian (Portland, OR) Via Acquire Media NewsEdge) March 11--Portland network security company Tripwire said this morning that it will buy a similar business in San Francisco, the first in what Tripwire promises will be a series of deals aimed at eventually creating another billion-dollar Oregon tech company.
Both Tripwire and its new acquisition, nCircle, provide technology to large organizations to guard against intruders and technical vulnerabilities. They were occasional rivals, said Tripwire chief executive Jim Johnson, but more often sold complementary products to a similar customer base.
Tripwire tends to focus on critical systems such as financial transactions, he said, which require relatively expensive, labor-intensive security. By comparison, nCircle's tools are less demanding -- but essential in giving a company an overall sense of its risk profile.
"A lot of our customers buy both our products," said Johnson, a former Intel vice president who took the top job at Tripwire in 2004. "We had a number of requests about bringing them together."
The companies did not report terms of their deal.
Tripwire had about 325 employees prior to the deal -- 225 in Portland. It hasn't disclosed 2012 revenues, but Johnson said they were north of $100 million.
The combined company will have more than 500 employees, according to Tripwire, and had bookings last year of about $140 million.
Tripwire describes itself as "highly profitable." In 2010, Tripwire's last full year prior to its sale, the company had net income of $4.0 million on revenue of $86.2 million.
Combined with nCircle, Tripwire said it would have ranked among the largest companies in its field last year -- alongside divisions of IBM, EMC, Symantec and McAfee.
Tripwire said it will integrate nCircle's operations into its own, and market nCircle's technology under the Tripwire brand. Johnson said he expects the combined company to grow, but he said some duplicate jobs will likely be eliminated following the deal.
Founded in 1997, Tripwire sold its business in 2011 to a private equity firm called Thoma Bravo after failing to reach the growth rate it had sought for an initial public offering.
Thoma Bravo helped finance today's deal, Johnson said, along with cash from Tripwire's own earnings and bank loans. Debt is part of Tripwire's growth plan, he said, but "We're not anywhere near our limits."
Tripwire has spent the two years since its sale readying itself for growth, Johnson said, investing in internal financial systems, technical capabilities and other business functions. Plans call for the nCircle deal to kick off a series of acquisitions.
"We've already got a list of candidates for the next one," he said. "First, we've got to make this one successful."
It could take close to a year to fully integrate nCircle, but Johnson said Tripwire could be ready to move sooner than that on another deal if the right opportunity arises.
"This is definitely part of our DNA now," he said.
And with a patient, deep-pocketed owner, Johnson said he's in no hurry to take another swing at an IPO. He said he believes Tripwire could one day generate $1 billion in annual revenue.
"My preference," Johnson said, "would be to grow this thing as much as I can, as long as I can, under private ownership."
Note: This article has been updated with additional context and comment from Tripwire's CEO.
-- Mike Rogoway; Twitter: @rogoway; phone: 503-294-7699
(c)2013 The Oregonian (Portland, Ore.)
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