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Private Equity Giants Buy Cybersecurity Firm for $400 Million

The trend of private equity firms snapping up cybersecurity businesses continues.

BlackRock and Pamplona Capital Management have jointly acquired PhishMe, a cybersecurity company based in Leesburg, Va., in a deal that valued the firm at $400 million.

Pamplona has purchased a two-thirds stake in the business, while BlackRock has bought the remainder, a person familiar with the terms of the deal told Fortune.

In addition to the change in ownership, PhishMe on Monday rebranded itself as “Cofense.” The new name derives from a combination of “collaborative” (or “collective”) and “defense.”

Rohyt Belani, CEO and cofounder of the company now called Cofense, said the executive team decided to sell the business to allow “early investors to cash out, and for employees and common stock holders to partake in the spoils.” The company was last privately valued at roughly $200 million after its most recent fundraising round in July 2016, according to Pitchbook, a database that tracks venture capital deals.

The cybersecurity industry benefited from a flurry of VC activity as big data breaches made headlines over the past few years. A recent pullback in funding, however, has left a glut of companies struggling to find new means of financing.

Belani, who plans to remain at the helm of Cofense, told Fortune that the company has its “eye on profitability,” and that it is looking to break even on a cash basis in the fourth quarter of next year. He said the company brought in $55 million in revenue last year.

Under BlackRock and Pamplona, Cofense has set ambitious sales targets for next year. Belani said the company will strive to double its revenues to $100 million in annually recurring revenue in the months to come.

Since its founding in 2011, the company formerly known as PhishMe became best known for simulating phishing attacks for customers. The company “was a victim of its own branding success,” Belani said, offering justification for the rebrand.

The PhishMe name failed to convey how the company had grown beyond its original niche into new areas of the cybersecurity market, like security automation and orchestration, Belani said. The business began hunting for an alternative name in the spring of last year, he said.

Cofense is not the only cybersecurity company to be gobbled up by private equity firms in recent years. In 2016, Vista Equity Partners acquired Ping Identity, a digital identity firm, for a reported $600 million. Last year TPG Capital acquired a 51% stake in McAfee, the antivirus maker, at a valuation of $4.2 billion and, later that year, Thoma Bravo bought Barracuda Networks for $1.6 billion.

“We weren’t excited about handing the keys over to a larger security company,” Belani said of the company’s decision to sell to private equity buyers. The new owners, he said, could “incentivize us with equity to continue doing what we’re doing.”

“We’ll get a second bite of the apple, so to speak,” he said.