“Cyber is a hot market,” said David Leach, who leads private equity investments at Chertoff, which advises companies and governments around the world on security and risk management. Chertoff was founded by former U.S. Homeland Security secretary Michael Chertoff.
“This deal in particular is a partnership deal,” Leach said. “No one is cashing out and selling. Management is going to continue to own a big stake. Everyone is putting money into the company to grow it together.”
Terms of the deal were not disclosed, although the Carlyle U.S. middle-market fund providing the capital generally involves investments in the $50 million to $100 million range.
“Cyber threats are on the rise and Coalfire is at the forefront of helping corporate America address the problem,” said Mike Gozycki, principal in Carlyle’s mid-market fund.
Coalfire, founded in 2001, is based near Boulder, Colo., and has 1,500 customers, including more than 60 Fortune 500 companies. Leach said Coalfire will attempt to double its revenue by 2017. It plans to aggressively expand beyond the firm’s current headcount of 300 in the United States and United Kingdom.
The Chertoff Group knew Coalfire from partnering with the firm on business. Early this year, a banker representing the Colorado firm contacted Chertoff about investing in the firm.
“We grew the company 50 percent last year and we will do $50 million in revenue this year,” said Coalfire chief executive Larry Jones, who is staying with the company. “The company was really on a hyper-growth trajectory and profitable. We were looking for a financial partner to be able to continue to grow at that rate but also someone who could add strategic value, like the Carlyle Group and The Chertoff Group.”
Leach said Chertoff brought in Carlyle because the deal was bigger than Chertoff wanted to do by itself.
In addition to Washington, D.C. and the U.K., Coalfire has offices in Atlanta, Boston, Dallas, Denver, Las Vegas, New York City, San Diego and Seattle.
The company has multiple lines of business, but its most prominent sectors are working with companies to help them find vulnerabilities and to certify that they comply with industry standards. Coalfire also helps firms respond to security breaches.
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