Cybersecurity Vendor Nyotron Eyeing Private Equity Buyer: Report

Nyotron first came to market earlier this year and targeted strategic buyers, but paused the process when the coronavirus pandemic hit, according to PE Hub.

Nyotron is looking for a private equity buyer and accepting first-round bids as part of the sales process, according to a PE Hub report.

The Santa Clara, Calif.-based cybersecurity vendor first came to market earlier this year and targeted strategic buyers, but paused the process when the coronavirus pandemic hit, three people familiar with the matter told PE Hub. Nyotron has now returned to the auction block and opened the process up to include private equity-backed firms as well, PE Hub reported.

Investment banks Berkery Noyes and Drexel Hamilton are advising Nyotron on its sales process, according to PE Hub. Neither Nyotron, Berkery Noyes nor Drexel Hamilton immediately responded to requests for comment from CRN.

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Nyotron was founded in 2012, employs 54 people, and has raised $43 million in four rounds of outside funding. The company most recently brought in $10 million of funding from Irvine, Calif.-based distributor Ingram Micro as part of an October 2018 strategic partnership agreement intended to accelerate Nyotron’s presence in the United States and build its global channel ecosystem.

The company’s headcount has fallen by 8 percent from 59 employees a year ago, driven largely by a 29 percent reduction in the salesforce and a 27 percent reduction in engineering personnel since April 2019, according to LinkedIn. Nyotron produces less than $10 million in annual sales, and a potential transaction is expected to value Nyotron at a mid single-digit revenue multiple, sources told PE Hub.

The company was growing annual recurring revenue at a more than 500 percent rate prior to the coronavirus-driven economic downturn, according to PE Hub. Even with current and anticipated coronavirus impacts, Nyotron is expected to grow its annual recurring revenue by more than 100 percent in 2020, PE Hub reported.

The company was co-founded by Nir Gaist and Ofer Gaist, who had served as the company’s chief technology officer and chief operations officer, respectively. Sagit Manor came over from the finance side of global electronic payment provider Verifone in December 2017 to become the CEO of Nyotron.

Nyotron’s OS-Centric Positive Security endpoint protection offering maps legitimate operating system behavior to better understand abnormalities that might led to damage such as file deletion, data exfiltration, and encryption, according to CRN’s 2018 Emerging Vendors report. The company targets highly regulated organizations with more than 1,000 employees, according to the writeup.

The company’s signature product, Paranoid, focuses on the damage stage of the attack by mapping all the ‘right’ ways to do things on an endpoint, according to the Emerging Vendors writeup. When an attack attempts to delete, exfiltrate or encrypt files, Paranoid knows those actions aren’t legitimate and blocks execution.

Nyotron said it’s building an ecosystem of managed security service providers, solution providers, distributors, systems integrators and consultants who are forward-thinking security experts to work with the company and address tomorrow’s threats today. The company also works with alliance or OEM partners whose technology complements or integrates with Nyotron’s endpoint protection platform.

The company had just four solution provider partners worldwide and two in the United States as of July 2018, and said it was planning to bring on 50 partners or less over the next year as part of a broad national U.S. recruitment effort, according to CRN’s 2018 Emerging Vendors report. Managed service providers are the ideal solution provider partner for Nyotron, according to the writeup.