Tuesday, May 21, 2024 May 21, 2024
75° F Dallas, TX

Brainspace Sells to Private Equity Firms Forming New Global Cybersecurity Company

The Addison-based company will stay in the region, and its team will remain intact as part of the deal.

Brainspace Corp. has agreed to be acquired by longtime investor Medina Capital and private equity firm BC Partners in order to create a global cybersecurity company as part of a $2.8 billion deal.

“They’re going to pour gas on the flame,” Dave Copps, Brainspace CEO, said about the two partnering firms. “They really love what’s happening here, and they want to make it bigger, better, and smarter.”

The new company, which has yet to be named, will include a portfolio of 57 data centers to be acquired from communications company CenturyLink for $2.3 billion, according to The Wall Street Journal, and Medina’s portfolio of security and data analytics companies, which currently includes three other businesses. We could assume, through simple math, that the Brainspace acquisition was likely around $500 million, assuming the transaction only included the CenturyLink properties and Brainspace. The transaction is expected to close in the first quarter of 2017.

The new company, which will be led by Medina Capital founder and managing partner Manuel Medina, will start with more than 3,500 customers and 2.6 million square feet of raised floor capacity. The executive team will come from Medina Capital, which includes the former leadership team of Miami-based data center and cybersecurity company Terremark, which was acquired by Verizon for $2 billion in 2011. The company is expected to employ more than 1,000 employees, Medina told the Miami Herald. While it’s unclear how many people will be based in DFW, Copps said a large group of employees will be in the Dallas-Fort Worth area, and the region could be considered for the new entity’s headquarters. Copps will stay at the top of the Brainspace piece of the company, which will remain in Addison along with all of its employees.

“They don’t want to carve off anyone from the company,” Copps said. “They ‘re making us sign new contracts.”

Medina Capital led the charge on the creation of the new company, after stacking its portfolio with data security and cyber firms. The firm had a previous relationship with BC Partners, and the two decided to bring all their resources together to create a larger company. They engaged with Brainspace on the idea nearly three months ago.

“It’s a new beginning with more resources,” Copps said. “It’s a really rare thing, so I’m thrilled.”

The news comes three weeks after Brainspace, which focuses on artificial intelligence, machine learning, and data analytics, announced a strategic investment from In-Q-Tel Inc., a nonprofit that invests in technologies for the U.S. Intelligence community. Medina Capital’s relationship with Brainspace dates back to 2013, when Brainspace, then called PureDiscovery, landed a $10 million investment from the Miami-based private equity firm. Medina then made a second investment, leading a $5 million bridge round in July 2015.

The information security market continues to grow both in DFW and nationally. Earlier this year, Lance Crosby, founder and former CEO of SoftLayer, announced a $150 million investment for his cybersecurity startup StackPath. Gartner expects the market to reach $113.4 billion by 2020.