Is Sourcefire IPO A Done Deal?

Sourcefire, the e-security company gearing up for an initial public offering, is the subject of speculation as to whether another buyer after a $225 million deal fell through.

Sourcefire, the e-security company gearing up for an initial public offering, is the subject of speculation as to whether another buyer after a $225 million deal fell through. Officials at Columbia, Md.-based Sourcefire declined comment, citing a quiet period after filing its intent for an IPO with the Securities and Exchange Commission Oct. 25. The IPO terms have yet to be set.

The earlier offer was from Israeli companyCheck Point Software Technologies, but the companies backed away in March after the U.S. government began investigating national security implications, according to published reports. That offer, said Brad Adams, Boston Corporate Finance managing director, was a decent one--about seven times Sourcefire’s $32 million total revenue last year. And it sets a $225 million baseline for potential buyers, because the company is performing better than it was when the offer was made.

Andrew Braunbert, senior analyst with Current Analysis, agreed that Sourcefire probably wouldn’t receive a lower offer but added that he doesn’t think anyone is going to offer it. “I think if they would have had an immediate suitor it would have come up by now,” he said.

The trend for technology companies has been to expand business through M&A instead of an IPO, and during the last year companies have filed explaining their intent to go for an IPO but were bought before the deal could go through.

Early this year, JBOSS, another open source company, had filed to go public but was bought by Red Hat for about $350 million, with an additional $70 million for meeting performance targets. Adams speculated that an interested buyer for Sourcefire would likely be a large company such as Oracle, Red Hat, IBM or EMC rather than a private equity firm. None of those companies could be reached for comment.