Cybersecurity firm CynergisTek agreed last week to be acquired by competitor Clearwater Compliance, a healthcare-focused cybersecurity, compliance and risk management solutions firm.
The all-cash deal values CynergisTek at $17.7 million, the companies announced.
Austin, Texas-based CynergisTek provides cybersecurity, privacy, compliance and IT auditing services in highly regulated industries, including healthcare, government and finance.
Under the terms of the merger agreement, CynergisTek stockholders will receive $1.25 per share in cash, according to a press release. That represents a premium of approximately 112% over CynergisTek’s closing share price May 20 and a premium of approximately 48% over CynergisTek’s one-month volume-weighted average closing price through May 20.
After the merger, CynergisTek will be taken private as a subsidiary of Clearwater.
The acquisition is a "testament to the strength of CynergisTek’s people-centric approach to cybersecurity, privacy and audit and our important role in serving healthcare and our many other clients,” said Mac McMillan, president and CEO of CynergisTek, in a statement.
“We have made tremendous strides in expanding our service offerings over the years. We believe that merging Clearwater and CynergisTek as a private company, will allow the combined entity to be more agile with greater flexibility to continue investing in innovation with the opportunity to scale as a managed service provider (MSP) expanding and enhancing its service portfolio," McMillan said.
"Many industries, not just healthcare, are turning to MSPs for the support and expertise they need to meet today’s cyber threats. Building on our combined leadership position we’ll be able to create a more valuable platform for the industry and our clients," he said.
Clearwater says it works with more than 400 healthcare organizations, including 70 of the nation’s largest health systems and a large universe of physician groups and digital health companies, to provide cybersecurity and compliance services.
Steve Cagle, chief executive officer of Clearwater, said the company was interested in buying CynergisTek as the company is an "industry leader in healthcare cybersecurity, privacy and audit, supporting a large enterprise customer base."
“The combination of our companies will result in a comprehensive portfolio of solutions that add significant value for our customers and for the healthcare industry. We are incredibly excited to bring together two of the top healthcare-focused cybersecurity companies and look forward to working hand in hand with colleagues at CynergisTek to support our customers and proactively address their growing cybersecurity and compliance needs," Cagle said.
The deal is expected to close in the third quarter of 2022.
2021 was an active year for mergers and acquisitions in the cybersecurity industry. The level of activity is driven by growth in sectors such as identity management, zero trust, managed security services, DevSecOps and cloud security as companies look to strengthen their positions in the market.
Mergers and acquisitions in cybersecurity grew to $77.5 billion in 2021, according to research from cybersecurity consultancy Momentum. There were 14 $1 billion mergers and acquisitions, including deals involving McAfee, Auth0, Mimecast, Thycotic, Proofpoint and Avast, IT publication ZDNet reported.
In April, IT security company Imprivata picked up critical access management firm SecureLink to expand its cybersecurity solutions for healthcare. The deal, first announced Feb. 23, values the combined healthcare technology company at approximately $3.5 billion, according to media reports.