Proofpoint is considering pre-IPO funding as it plans to re-enter the public markets.

• Sumit Dhawan, CEO of Proofpoint, announced that the company is considering an initial public offering within the next 12 to 18 months, according to a report by CNBC.
• As CEO, Dhawan has been advocating for strategic mergers and acquisitions of smaller cybersecurity firms to promote industry consolidation.
• Proofpoint has gone public for the second time since being acquired by private equity firm Thoma Bravo for $12.3 billion in 2021.

Proofpoint, a privately-held cybersecurity firm, is considering external investors for pre-IPO financing and exploring mergers and acquisitions of smaller cyber companies as it plans to return to public markets in 2026, CEO Sumit Dhawan revealed to CNBC.

Dhawan, Proofpoint's newly appointed CEO, who took over in 2022 after the company was acquired by private equity firm Thoma Bravo, is considering exploring public markets within the next 12 to 18 months.

The outcome of the 2024 U.S. presidential election and general market conditions will still determine the timing of Proofpoint's IPO, according to Dhawan.

Since Proofpoint's acquisition by Thoma Bravo and Dhawan's appointment as CEO, the company has been exploring strategic opportunities such as mergers and acquisitions of smaller cybersecurity firms to drive industry consolidation.

Dhawan stated that Proofpoint is currently seeking acquisition targets that align with the company's strategic goals, but only at the right price.

Dhawan stated in an exclusive interview with CNBC that consolidation will occur in the technology industry, as seen in both the infrastructure and application platform spaces, where there is a shift towards building fewer but more comprehensive platforms.

"It is inevitable that the 2,000 or so non-profitable cybersecurity companies that are venture-backed will either be consolidated or cease to exist. This is because no market can sustain such a large number of players. Therefore, it will happen."

Dhawan stated that there is currently a "bid-ask spread" in the market for cybersecurity opportunities, with target companies demanding more money at the sale price than the valuations they are being offered. However, he also mentioned that there are "great opportunities" available in the market.

The road from private to public

Since its establishment in 2002 in Silicon Valley, Proofpoint has been providing technology that safeguards businesses from phishing attempts and other cyber threats on various platforms, including email, social media, mobile devices, and the cloud.

In 2012, Proofpoint went public in the U.S., but was later delisted after being acquired by Thoma Bravo in a $12.3 billion deal in 2021. The buyout occurred due to investor concerns over a slowdown in revenue growth.

Now, Proofpoint is once again looking to tap the public markets.

"Dhawan stated that we differ from typical IPO companies in several ways. These companies are usually smaller and have a unique profile. They often face uncertainty regarding profitability and are not easily consolidated."

Thoma Bravo has a history of taking private equity buyouts of companies that later go public for a second time. In 2019, Dynatrace, a cybersecurity firm that was acquired by Thoma Bravo in a 2014 buyout, went public again in a New York listing.

Dhawan informed CNBC that Proofpoint is considering private placements as one of its financing options to expand ownership by other private equity investors.

Dhawan stated that we are near the beginning of the process for seeking funding from investors beyond our private equity owners, but he emphasized that the firm has not yet formally initiated this process.

Proofpoint's CEO stated that he believes the company's unique selling point in the tech and cybersecurity industry is its ability to achieve both growth and profitability, with double-digit growth rates and strong market leadership.