Bootstrapping a High Growth Cyber Security Venture with a Paycheck: Christian Geyer, CEO of ACTFORE (Part 7)

Sramana Mitra: So you have a bootstrapped company that is looking to go bootstrapping to exit straight away. Now, what is the ideal acquirer for this business? Is it a private equity firm?

Christian Geyer: I’m trying to avoid private equity. I’m not shunning them. I’m not saying that they’re bad. Private equity definitely has its place in the market. The whole reason why we built this company was to get into the hands of every incident response. Well, how do you do that? I don’t want to paint private equity in a bad light, but it’s going to be self-servicing. It’s going to be focused on value within the company and driving value for its shareholders.

What I’m looking to do is sell it to a much larger integrator who has deep inroads and deep inbounds in incident response. So if you think about who are the big players in the incident response space? You’ve got Palo Alto who just acquired the Crypsis group back in 2020 for $260 million.

Sramana Mitra: Are you talking about Palo Alto Networks?

Christian Geyer: Yes, Palo Alto Networks. So they rebranded it as Unit 42 and are big on the network circuit. They’re doing thousands of deals.

Then, you’ve got CrowdStrike. CrowdStrike is a humongous player globally. Then companies of the likes of Booz Allen, PwC, Deloitte, you’ve got lots of people out there that could open our channels to market significantly if they acquired us. And that’s what I’m looking for, is how do I get a strategic acquisition put together to where it benefits not just shareholders, but it benefits the community as a whole and all consumers out there.

Sramana Motra: Interesting. Palo Alto Networks, CrowdStrike are all on subscription revenue business models or ARR business models. The fact that you are not, is that an issue?

Christian Geyer: No, because they do have offerings that are not, so they don’t just sell software.

CrowdStrike also has a forensic unit. Everyone like Palo Alto Networks and the Crypsis group, they’re not subscription based. When you’re an incident response, you quote for the actual engagement, you quote for their work service.

Sramana Mitra: There’s a professional service of business that can absorb something like this and really find hugely profitable value.

Christian Geyer: Yeah. We’re a very small team in that we’ve automated the majority of the solution.

Yes. So when you look at organizations, like PwC, Booz Allen, and Deloitte, they’re a professional service model. They have thousands of consultants around the globe that work on these cases.

So if we’re able to do a large majority of the business, but with a small team I would see that’s valuable to them.

Sramana Mitra: Very valuable.

Christian Geyer: They could acquire us to take the software and reduce their staff size and become significantly and more efficient.

Sramana Mitra: You don’t have the types of valuations that a Palo Alto Networks or CrowdStrike has currency wise, in terms of market value currency, the Palo Alto Networks and CrowdStrike have much bigger currency to acquire you.

So if you go into these companies, you get a better valuation, most likely.

Christian Geyer: Well, most likely. But, incident response is its own segment and it demands its own sort of valuation. In incident response, the typical valuation is 10 x.

If you look at even Booz Allen. They’re a professional services company, but in 2022, they purchased Trace Point. They also purchased Liberty Cyber for government. Those two acquisitions were valued at a billion dollars. I know a lot of the people in there, and it’s a 10x multiple on revenue.

So trailing months, 10x multiple, and that’s the value you get in cyber incident response. It’s about who’s poised to grab market share. Let’s say the more we get our name out there, the more we continue to grow.

We just surpassed 1300 engagements in the last two and a half years. So we’re getting significant traction out there. It’s not going to be long before we start getting knocks on our door, and I’ve already started receiving some.

Sramana Mitra: I’m sure you will. This is a fantastic story. Congratulations. Very well played. Thank you. You know, as they say in French, bien joué. Well played!

Christian Geyer: Yes. Thank you. It was hard fought, and it’s a labor of love and passion.

Sramana Mitra: And hard earned.

Christian Geyer: But I can’t reiterate more strongly, don’t let somebody take your idea. I wasn’t about to let somebody walk away with the lion’s share or the majority of an idea that we built.

Sramana Mitra: Yes. Very good. Wonderful story. I really enjoyed it, and I very much look forward to sharing this with our community. Thank you for sharing.

Christian Geyer: Happy to always share. If you need me to talk more about anything else…

Sramana Mitra: Let me know what happens with your acquisition, please. That’s something I’d like to be in the loop of, so when you find your acquisition-fit finally, let me know.

Christian Geyer: I will.

Sramana Mitra: Thank you. Okay. Bye Christian.

This segment is part 7 in the series : Bootstrapping a High Growth Cyber Security Venture with a Paycheck: Christian Geyer, CEO of ACTFORE
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