Action1 draws line in the sand on acquisition approaches

Action1 has announced that it will remain founder-led, indicating that it will turn down several offers.

It was alleged that a $1 Billion offer was made by CrowdStrike. However, this is incorrect, and Gur Talpaz VP, Corporate Development at CrowdStrike, made a statement to deny this on LinkedIn saying:

“In the M&A game, rumors are currency. We accept that, and my general response is to ignore them. But what I’ve seen over the past few weeks from a company called Action1 goes far beyond anything I’ve ever experienced in my career, and I feel compelled to set the record straight.

“CrowdStrike had one, 45-minute group conversation following RSA with Action1. Not one single senior member of the CrowdStrike team was a part of this conversation – me included. Action1 signed no NDA. We did not receive a single diligence item of any kind and disengaged after a surface level conversation.

“Nearly three months later, false reports of an offer and process emerged in the press, driven by a ‘leaked’ email with outrageous claims, including a valuation that was never discussed and an M&A process that never happened. This behavior destroys trust and undermines the credibility of our industry.”

Action1, is a leading provider of an integrated real-time vulnerability discovery and automated patch management solution. Some of the approaches indicated over the last year may have been from larger security companies, others from investment firms.

Action1 has taken funding in the past, raising $20 million last year for R&D investment according to Silicon Angle. Though, its press release has no mention of funding, just that it would invest $20 million in its patch management platform. It was unclear where the investment came from.

There is no indication where the $1 billion valuation came from in the articles on the web. Regardless, that growth seems likely to continue, with Alex Vovk, CEO and Co-Founder of Action1, stating, “We are honored by the interest we have received from major industry players, as it validates our strategy and leadership in the space. However, after careful consideration, we have determined that remaining founder-led is the best path forward. While it is tough to turn away from significant financial opportunities, we believe our future is far brighter as an independent company.”

There is little doubt that many firms, investors and security firms, would be interested in acquiring the business, but for the time being, that isn’t going to happen.

So what now for Action1

Action1 has a vision of “a world where cyberattacks exploiting vulnerabilities are entirely prevented across all types of devices, operating systems, and applications.” Its integrated real-time vulnerability discovery and automated patch management solution aims to achieve this. It recently reaffirmed its System and Organization Controls (SOC) 2 Type II and ISO 27001:2022 certification.

Action1 is in a good place, with record growth last year and is on track to achieve $100 million ARR whilst cash positive is no mean achievement. They have the funds to invest in further growth and, as seasoned entrepreneurs, are building an outstanding company. If the $1 billion investment is correct, the >10X multiplier is high, demonstrating the potential value of the company. Continued growth is unlikely to see that multiple grow, but the valuation could easily surpass that within a year or two.

Mike Walters, President and Co-Founder of Action1, commented, “We are excited to continue on the path of innovation and are deeply grateful to our customers worldwide for their trust and support.”

Enterprise Times: What does this mean

Walters and Vovk have successfully led the growth of Action1 after selling Netwrix to TA Associates in 2020 in a deal that valued the company at several billion. It seems that, for now, they wish to continue building their next firm to even greater things. In 2023 the company experienced 376% growth through its reinvention of patch management. Action1 also opened its first data centre in Germany in 2023, aiming to expand quickly across Europe, with a presence in the UK, France and DACH.

The announcement puts a line in the sand about the ownership and future. It doesn’t mean that the firm won’t continue talking to investors, but it also means that an acquisition is off the table. The time that this process has taken is no doubt distracting and Walters and Vovk are likely wanting to focus on the business and are trying to put an end to the speculation and interruptions.