The outgoing CEO of cybersecurity giant Forescout speaks out on navigating a dramatic billion-dollar acquisition amid a global pandemic: 'I've had more fun periods in my life'
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On February 6, cybersecurity firm Forescout ended months of speculation when it finally confirmed plans to go private in a massive $1.9 billion acquisition. As word of the deal broke, the firm — which specializes in keeping internet-of-things devices secure — posted another disappointing set of quarterly results, which fell short of analyst expectations and saw net losses climb to $20 million a year. "We missed one of our quarters, and Wall Street always prefers short-term revenue over the long-term, so we had to deal with that," outgoing Forescout CEO Mike DeCesare told Business Insider in his first major interview since the deal closed. Founded by a team of Israeli entrepreneurs in 2000, Forescout has become one of the best-known cybersecurity companies in the world, recruiting DeCesare – previously president of Intel Security – to oversee the firm in 2015. A lukewarm IPO in 2017 saw the company's market cap drop almost 20% from its previous estimated billion-dollar valuation. At the end of 2019, DeCesare was forced to defend a "disappointing" quarter, promising investors he would "[take] steps to improve things we can control, including sales execution and shaping our revenue model for better predictability". Lawyers and activist investors were circling the company amid a flurry of cybersecurity firms going private, including Armis Security, Avnet, and Segasec. In February 2020, Advent International, one of the biggest private equity firms in the world, revealed it had partnered with Crosspoint Capital Partners and agreed to buy all of Forescout's stock at $33 a share — a $4 raise on the day's closing price. Forescout then sued its prospective buyers for trying to back out Little more than a month after the acquisition announcement, the world had been upended by the pandemic. As countries around the world went into lockdown, venture capital deals collapsed and the stock markets went into freefall. On May 21 – just days before the acquisition was set to close – a dramatic development hit the headlines: Forescout was suing its would-be acquirer Advent for trying to back out of the deal. As reported by Reuters, Advent claimed Forescout had fared worse than its competitors under COVID-19, adding that it had failed to maintain operations as agreed within their contract. The former argued back, claiming the contract's clauses didn't apply to pandemics, that Advent was well aware of the coronavirus' spread when it signed the deal, and demanded courts force the purchase through. "COVID-19 caused a lot of companies to either like or not like where they were in relation to deals ... There were times when we weren't having the most pleasant conversations," says DeCesare. "I've definitely had more fun periods in my life." Back on track After almost three months of legal wrangling and lawyers exchanging letters – not to mention more devastation induced by the pandemic – it wasn't clear what would become of the Forescout buyout. On July 17, the standoff finally came to and end: Advent and Crosspoint would buy all of Forescout's stock at $29 a piece, cutting the overall pricetag down to $1.4 billion. While this might have represented a downgrade on $33 per share previously agreed, it was now higher than the firm's closing stock market price, which had fallen to around $25 a piece. The deal finally went through on August 17. In a statement, a spokesperson for Forescout said: "We believe this was the best outcome for both parties," adding that while a reduction in price was "not ideal in a perfect world," the situation caused by COVID-19 had to be kept in mind. Looking back on those difficult few months, DeCesare says he's chalked it up as a learning experience. "I've never gone through something like this before, but there was just a tremendous amount of time going into understanding every little detail. "When the lawsuits started getting ugly, everything became a little more formal. But Advent and Crosspoint are obviously very good at what they do. "If you keep your ears open and listen, you can learn a lot." In a statement to Business Insider, Bryan Taylor, head of Advent's technology investment team, said he looked forward to "supporting Forescout's continued innovation and address a large, growing market opportunity." On Thursday, the company announced DeCesare would be stepping aside as CEO to make way for Greg Clark, the ex-CEO of software giant Symantec who personally oversaw the acquisition in his role as a managing partner at Crosspoint. DeCesare will remain as co-chair of the company. "When you sign a deal pre-pandemic, and then something like that happens, you have to be able to defend your position," Clark told Business Insider. "It's not something you'd like to go through again." "We worked together and aimed our beacon on getting through the other side of COVID-19. I'm incredibly excited about the future." Join the conversation about this story » NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America
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