September was a strong month for cybersecurity M&A and VC funding activity despite continuing industry headwinds and a sluggish economy. On the macro side, the OMB released its much-anticipated Sequestration Report, which covered the potential federal budget impact of sequestration. Despite the wealth of information provided, the report lacked program-level details, and as such, uncertainty remains a fundamental concern for industry participants. Additionally, the failed Cybersecurity Act of 2012 made headlines again as President Obama, the DHS, and the FBI began drafting an Executive Order to pass voluntary parts of the Act before year end.
As for M&A activity, General Dynamics, Novetta Solutions, and KeyW Corporation each made cyber / intel acquisitions in September, continuing their momentum from August. GD targeted mobile security in its acquisition of Open Kernel Labs, while Novetta focused on signals intelligence with its purchase of International Biometric Group. KeyW acquired systems and software engineering firm, Poole & Associates, after Poole won a $150 million contract to provide system engineering and program management support to an unnamed U.S. intelligence customer. Only three days later, KeyW announced it had acquired security information company, Sensage. Venture capital also saw impressive funding rounds for cyber companies, notably the $50 million Series A for Tenable Network Security. Shortly after that funding round, Tenable signed a formal strategic partnership and technology development agreement with In-Q-Tel.