Next-Generation Technologies & Secure Development , Security Operations , Threat Intelligence

ReliaQuest Buys Threat Intel Firm Digital Shadows for $160M

Deal Will Provide Customers With Attack Surface Management and Dark Web Monitoring
ReliaQuest Buys Threat Intel Firm Digital Shadows for $160M
ReliaQuest founder and CEO Brian Murphy (Image: ReliaQuest)

ReliaQuest has agreed to purchase Digital Shadows for $160 million to infuse its security operations platform with threat intelligence, attack surface management, and dark web monitoring.

See Also: The Ultimate Guide to Threat Detection

The Tampa, Florida-based company says its proposed acquisition of San Francisco-based Digital Shadows will provide customers with more visibility and context around potential threats facing their networks, endpoints or cloud environments, according to founder and CEO Brian Murphy. Digital Shadows is expected to both reduce the cost associated with visibility and drive down the mean time to response.

"We've got to increase visibility, reduce complexity and help customers manage risk," Murphy tells Information Security Media Group. "And this acquisition does those three things."

Making Threat Intelligence Meaningful

Digital Shadows was founded in 2011 and employs more than 150 people. Roughly 100 of its employees are based in Europe, according to Murphy. All of the company's employees - including CEO Alastair Paterson and Chief Innovation Officer James Chappell, who co-founded Digital Shadows - will join ReliaQuest once the acquisition closes in a few weeks, Murphy says (see: Multi-Cloud Environments: Securing Greater Visibility).

The company excels at making difficult and complex threat intelligence meaningful to customers by customizing the data and connecting it to specific dark web threats that the customer faces, Murphy says. Digital Shadows also studies and researches different threat actor groups and is able to contextualize that information through threat briefings that help customers determine what response is warranted.

"They really do take a holistic approach to threat intelligence," Murphy says. "It isn't just consuming a bunch of feeds."

This is only the second acquisition in ReliaQuest's 15-year history, and it comes 2 1/2 years after the company purchased breach and attack simulation provider Threatcare for an undisclosed amount. ReliaQuest has been focused on organic growth since its founding, and Murphy doesn't anticipate that acquisitions will become a big area of focus, though he says the company is always studying the market.

"We're at a scale now where if we see an opportunity in an acquisition that makes sense, we can absolutely go do that," Murphy says. "But I don't think that's our strategy. We're not going to be single-threaded, but we are going to keep our head on a swivel and look around."

Going Beyond the Enterprise

ReliaQuest revealed in December that it had surpassed $100 million in annual recurring revenue and achieved a valuation in excess of $1 billion. Murphy says the company is growing ARR by 60% on a year-over-year basis and adding between 50 and 60 new hires each year. The company employs nearly 900 people today and should have a headcount approaching 1,100 people once Digital Shadows is acquired.

ReliaQuest plans to take Digital Shadows' threat intelligence, briefings and other key information and embed them into the company's detection engine to increase the platform's visibility and provide both an inside-out and outside-in view of the threat environment, Murphy says. The company will also continue to offer the threat intelligence capability to existing Digital Shadows customers on a stand-alone basis.

There is limited customer overlap between the ReliaQuest and Digital Shadows customer bases since the former has largely grown in the United States while the later has more European clients, Murphy says. Digital Shadows supports both enterprise and midmarket customers, while ReliaQuest historically served enterprises with at least $1 billion in revenue and has shifted down-market over the past year.

ReliaQuest has seen increased demand from upper midmarket companies with between $200 million and $1 billion in annual sales as CISOs, architects, engineers and security operations professionals take new jobs at smaller companies with many of the same protection needs, Murphy says. Both ReliaQuest and Digital Shadows serve a wide range of verticals including financial services, healthcare and retail.

The platform appeals to larger customers who are looking to build more automation into their security strategy and relieve their internal security staff of time-consuming, monotonous tasks, Murphy says. For smaller customers, ReliaQuest is used as a replacement for managed detection and response technology that focuses heavily on the endpoint but fails to incorporate much network and cloud telemetry.

"What drove how much sense this acquisition made is that our goals didn't have to change," Murphy says. "It's supportive of our priorities and supportive of how we've always run the business."

About the Author

Michael Novinson

Michael Novinson

Managing Editor, Business, ISMG

Novinson is responsible for covering the vendor and technology landscape. Prior to joining ISMG, he spent four and a half years covering all the major cybersecurity vendors at CRN, with a focus on their programs and offerings for IT service providers. He was recognized for his breaking news coverage of the August 2019 coordinated ransomware attack against local governments in Texas as well as for his continued reporting around the SolarWinds hack in late 2020 and early 2021.

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