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"Private equity firms increasingly are setting their sights on the security industry due to its rapid and steady growth." I do not trust private equity to main
by ausbah 7y ago
"Private equity firms increasingly are setting their sights on the security industry due to its rapid and steady growth."
I do not trust private equity to main the standards necessary for quality and trustworthy security.
- tyingq 7y agoCybersecurity seems to be growing fast enough that the talent has run out. So lots of under-qualified CISO types running around with money to spend. I think the PE firms are onto something, investment wise.
- TomMarius 7y agoAnd what alternative do you propose? Public equity? Ever heard of NSA, Australian government, UK, etc, and that's just the "democratic", "free" world?
- mech1234 7y agoAre you implying that public equity is some sort of government-owned entity? My best guess is that you are confused as to what the term "private equity firm" means. Your post is so entwined with implications that I have no idea what you really mean.
- TomMarius 7y agoIn my country public means government controlled, which of course includes any assets, yeah. I think as a founder of a startup with VC money and successfully investing with my own money for some time as well, I have a modest grasp on what a private equity firm is.
- kube-system 7y agoIs your startup planning to have an initial public offering? I’d be interested to hear how that works in your country.
- TomMarius 7y agoHow is that in any way relevant to ownership of assets?
- kube-system 7y agoThis is about private equity vs public equity, no?
- TomMarius 7y agoIn finance, equity is ownership of assets that may have debts or other liabilities attached to them. Publicly owned assets are going to further the goals of said owning public entity (just as if it was a private owner) and of its parents in the hierarchy.
- kube-system 7y agoYou're conflating public/private ownership and public/private availability. "Private equity" doesn't mean "privately-owned equity". It refers to equity which is not publicly traded. Likewise, public equity doesn't mean "publicly-owned equity"... it means "publicly-traded equity". See: https://en.wikipedia.org/wiki/Public_equity https://en.wikipedia.org/wiki/Public_equity Also see definition 6(b): https://www.merriam-webster.com/dictionary/public https://www.merriam-webster.com/dictionary/public Again, I'm not sure if you live somewhere that this might be different, as you alluded above, but this is generally the case across predominantly English-speaking countries.
- deleted 7y ago[deleted]
- admax88q 7y agoTo be fair I already don't trust RSA Security before this sale because of Dual_EC_DBRG.
- kyrra 7y agoAs was said in another thread, you only tend to hear about the private equity deals that go bad. Here are some of the big ones both good and bad: https://www.investopedia.com/articles/markets/111015/10-most-famous-leveraged-buyouts.asp https://www.investopedia.com/articles/markets/111015/10-most... PetSmart was one success story I heard from this podcast: https://www.wsj.com/podcasts/the-journal/how-petsmart-solved-its-chewy-problem/3cb86a84-133d-4a21-b19d-7981e90d1508 https://www.wsj.com/podcasts/the-journal/how-petsmart-solved...
- satya71 7y agoYeah, some times it does go well. But the managers make money either ways, since they pay themselves back immediately using leverage.
- sailfast 7y agoThere is never a bad time to read Barbarians At the Gates to understand how the incentives work in these deals and to help judge for yourself whether they're going to work out or not. Spoiler / Hot Take: if you're overloading the company up with debt (even cheap, short-term stuff) and taking out cash based on "revenue projections" or "realized synergies" it's probably not gonna work out so hot when the loan comes due.
- mcrae 7y agoDebt isn’t dirty. There’s a reasonable case to make for having an appropriate debt load in terms of tax shields and motivating management.
- batmenace 7y agoI do, for the sole reason that at the end of (almost) every private equity deal is an exit, and in order for the company to be sold at a higher price than it was bought, it still has to be good/better at what it is supposed to be doing. Also, from my experience for these sorts of Tech deals, the level of due diligence conducted before an exit by potential buyers can be extensive, so I doubt they'd let the security parts of a security business go bad.
- chadlavi 7y agoDoes PE do the VC thing where they buy 10 or 20 things expecting 1 or 2 to hit big and the rest to fail? If so, they're placing a bet, but if it's not promising they'll let it die on the vine.
- pbk1 7y agoIt's kind of the opposite - funds take relatively concentrated positions using a lot of leverage then install new management or hire consultants to make the company more profitable (on paper at least, and usually by cutting costs). Also, VC returns are distributed according to a power law because most startups won't pan out. Private equity buys companies later in their lifecycle, banking on levering up stable operating cashflow rather than banking on the product becoming the next FAANG unicorn. There's a bit of a continuum between VC -> Growth Equity -> Private Equity.
- ska 7y agoThey operate a bit later on a different risk profile. Their MO is more like (1) take something that is basically working but needs capital (2) work out a deal that gives them a enough leverage (e.g. board input/control, debt financing pressure, etc.) then (3) squeeze it for a quickish exit for the PE and (4) move on to the next. Doesn't always work, of course, but that's the playbook. Of course the flip side of that is sometimes, particularly with a young company, they just don't know what the hell they are doing. A PE company could potentially fix some of that, potentially at a reasonable cost. One way to perhaps think of it is this: VC types are in the business of betting on people, and don't necessarily trust the product. PE types are in the business of betting on products, and don't necessarily trust the people.
- rdl 7y agoRSA was already incapable of maintaining those standards.
- ThisIsTheWay 7y agoI don't trust Dell to do that either...
- philjohn 7y agoTo be fair, Entrust and RSA tokens are a relic of the past, systems like Duo Mobile are far better and easier to use.
- ska 7y agoI think you can shorten that statement significantly, wlog.