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The little four about to eat the big

four’s lunch

Paul
Paul
PaulSmith
Smith
Smith Technology editor

Oct 18, 2021 – 9.00am Save Share

A quartet of Australian consulting firms has negotiated a merger to form a new company
that plans to take on the growing cyber security practices of the big four consulting
firms, and go public on the Australian Securities Exchange next year.

The new company will be called Sekuro and combines the formerly separate firms
Privasec, Solista, CXO Security and Naviro in a deal that the founders said involved no
typical M&A buyouts and represented a tactical alliance that would make the combined
entity stronger than the individual parts.
 Newsfeed

Sekuro’s leadership team comprises the founders of the four separate companies that are merging to form it. Pictured left to right
are Prashant Haldankar, CISO, Sekuro (former CISO & Co-founder, Privasec,) Daniel Barratt, Talent Director, Sekuro (former Co-
founder & Director, Naviro & Solista, Daniel Fuller, Commercial Director, Sekuro (former Co-founder Solista & Naviro, Karan Khosla,
CIO, Sekuro (former CTO & Co-founder, Privasec,) Rob McAdam, CEO, Sekuro (former CEO, CXO Security), Noel Allnutt, Chief Sales
and Strategy Officer (former CEO, Solista), and Romain Rallu, COO, Sekuro (former CEO & Co-founder, Privasec.)

The combined firm currently has annual revenue of about $68 million. CXO Security
boss Robert McAdam will be the chief executive, and Solista’s CEO Noel Allnutt will be
Sekuro’s sales and marketing head. The CEOs of all four companies will take active roles
in Sekuro, which will have a combined nationwide workforce of 90.

Mr McAdam said the separate companies specialised in different aspects of cyber

security strategy, and the merger would mean it could offer a so-called “end-to-end
solution,” ranging from assessment of an organisation’s security posture to building new
capabilities, monitoring networks and augmenting in-house skills.

He said the deal had come from long-standing relationships forged over regular coffee
shop meetings, whereby the companies’ founders had agreed to go in together without a
single cent changing hands between them.

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“All four companies had received multiple private equity and acquisition offers from
well-known players in the Australian market. While some of these offers were very
attractive, each company ultimately turned them down believing that an opportunity
existed for a full-service cyber security firm to service the Australasian enterprise
market,” Mr McAdam said.

“Although no money has changed hands, we went through many of the same checks
required of a traditional M&A process to ensure we all knew who we were getting into
bed with. These checks included gaining an understanding of the quality of the earnings
of the other companies and our own internal valuations.”

The new company will remain founder-owned for now, with Sekuro shares distributed
based on the earnings of each of the four merging companies. Without disclosing the
specifics, Mr McAdam said there were some small differences in the sizes of the four
companies due to the style of offerings and their respective ages, but that all were
“hyper-growth” and came together on equal terms in terms of standing in the new firm.

He said the company would look to establish itself as a well-known operator in the local
market and demonstrate the virtue of the merger before going public in 2022. He said
the IPO process would begin immediately with all the necessary corporate advisory and
other related services firms already engaged, and that this would be the first opportunity
for any external investors to buy in.

“We are being very clear about our ambitions to raise equity for our growth plans
through an IPO next year, but at this point we have not brought on board any external
money in the form of private equity or similar,” Mr McAdam said.

“All shareholders are in this for the long term. We did this to join forces and raise our
own funds, while avoiding ‘big money’. Nothing stops anyone acquiring shares on the
ASX, but with our plan of offering only 20 per cent of our capital on the stock market at
IPO, it means we keep control and prevent any hostile takeovers.”
 Newsfeed

He said the decision on which of the four former CEOs would be the boss of Sekuro had
been taken based on discussions about personal ambitions and where each of their skills
were best suited.

Sekuro enters a competitive sector where the likes

likes
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are
areall
all
allpositioning
positioning
positioningthemselves
themselves
themselves as cyber experts, while global business
advisory firm Ankura set up shop locally in 2020 and private equity backed roll-up
machine CyberCX has acquired
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Last month ASX-listed cyber security firm Tesserent also kicked

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inform the federal government when they have been hit by a ransomware attack.

Mr McAdam said he believed Sekuro trumped the model of all these competitors, which
he positioned as financially motivated roll-ups and acquisitions as opposed to strategic
mergers.

“CyberCX is at its core a cyber security acquisitions machine, when a company is bought
by it, it is absorbed into the CyberCX identity and the staff must adapt,” he said.

“CyberCX is primarily a financial instrument run by fund managers to make profit. While
this works for them, it doesn’t work for Sekuro.

“The big four consultancies are acquiring smaller well-established but uncompetitive, or
market-tired, cyber security businesses to bolster their capability in terms of people and
processes; while Tesserent is specialising in acquiring established –and sometimes
stagnant –businesses, with a focus on giving their founders a fast and easy exit.”
Newsfeed

RELATED

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How
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Mr McAdam said he believed Sekuro could compete for larger deals with customers
tackling multi-faceted digital transformation programs, that the previously separate
entities were too small and limited in scope to bid for.

He said there were numerous areas where Australian businesses were increasingly
looking to external firms for cyber-related assistance, including board education and
heavier industry regulation, such as the impending legislation to raise cyber
requirements at companies
companies
companiesbroadly
broadly
broadlydefined
defined
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as
asbeing
being
beingimportant
important
importantnational
national
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infrastructure.
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”Cyber risk is a clear and present danger for Australian businesses and the federal
government’s recent consultation highlights the key dynamics driving better security
outcomes. Every organisation is approaching the meeting of expectations differently and
faces a unique mix of circumstances – both internal and external – which affect their
ability to meet these expectations,” Mr McAdam said.

“These organisations are trying to manage all of this during a period of accelerated
digital transformation brought about by COVID. These are exactly the sort of challenges
Sekuro can help with.”

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Paul
Paul
PaulSmith
Smith
Smith edits the technology section and has been a leading writer on the sector for almost 20 years. He covers
big tech, how businesses are using technology, fast growing start-ups, telecommunications and national
innovation policy. Connect with Paul on Twitter
Twitter.
Twitter Email Paul at psmith@afr.com
psmith@afr.com
psmith@afr.com

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