Geoff Lord (Tesserent)
A stronger position with the federal government and the delivery of the Australian Signals Directorate's (ASD) Essential Eight program are the driving forces behind Tesserent's latest acquisition spree.
This week, the publicly listed IT security player forked out a combined $33 million for Canberra-based IT services firms Pearson Corporation and Claricent.
According to Tesserent's notice to shareholders, the strategy behind these deals was to gain a stronger footprint in delivering the federal government's Essential Eight scheme across all its agencies, largely with the support of the Pearson Corporation.
Released in 2017, the ASD's Essential Eight strategies to prevent malware delivery is an evolution of its Top Four recommendations.
The Essential Eight strategies cover: application control; application patching; restricting administrative privileges; patching operating systems; configuring Microsoft Office macro settings; using application hardening; multi-factor authentication; and regular backups.
In addition, Tesserent also seeks to bolster its governance risk and compliance (GRC) team through its integration with Claricent.
Although the government sector already stands tall among Tesserent's customer base, the deal will provide it with more federal departments and agencies as clients.
These will be overseen by Tesserent's North Security unit, which is responsible for all its federal government customers.
The deal however will come at a cost to Tesserent. Broken down, it intends to pay $28.8 million for Pearson, plus a further $4.12 million for Claricent, both paid with a mix of cash and Tesserent shares.
The transaction will be split into two payments: half upon the acquisition’s completion later this month and half in September 2022.
Together, they bring a combined revenue of $24.3 million and earnings before interest, tax, depreciation and amortisation (EBITDA ) of $5.5 million.
"The addition of these two government focused organisations to the Tesserent group is a welcome one," the company's chair Geoff Lorde said.
"These acquisitions cement our position as the leading ASX-listed provider of cyber security solutions and services into federal government and the leading provider of Essential [Eight] consulting services, as well as contributing to our annual revenue and adding significant recurring EBITDA to the group."
M&A has been key to Tesserent's strategy and growth over recent years. Most recently it purchased Loop Secure for $13.5 million in August.
This was preceded by Airloom, Pure Security, Rivium, Secure Logic and iQ3. All these have now been rolled into the Tesserent brand under various units.
It has also made investments in cyber security startups TrustGrid and AttackBound, marking its first step in investing in globally applicable proprietary IP.
