FireEye Is Seeking a Private Equity Buyer, Hires Goldman Sachs as Advisor

The cybersecurity firm tries again to find a new owner

FireEye (FEYE) is reportedly seeking a private equity buyer with the help of Goldman Sachs. The news comes after the firm failed to locate a strategic buyer.

The company reportedly hired Goldman to guide them through the process. Multiple reports suggest that discussions are in the early stages of development.

This will be the second time FireEye has tried to sell itself. Back in 2016, the firm hired Morgan Stanley to help it locate a buyer.

While two bids emerged, neither one was high enough to satisfy the firm’s board of directors.

History of FireEye’s Efforts

FireEye had a successful IPO in 2013. After its public debut, its stock shot higher with the broader stock market. Shares peaked above $80 a share in early 2014.

However, shares have fallen sharply since those days. The stock now trades below the $15 level. The downturn occurred due to the firm’s struggles to produce a profit. During the last quarter, the firm said it lost a little over $67 million.

Roadblocks Ahead

Finding a buyer could be difficult for FireEye and its bankers.

The firm is losing money and hold a lot of debt on its balance sheet. While the company projects rapid growth over the next few years, the firm may not fit into the classic private equity mold. Traditionally, a private equity investor would add debt to the capital structure. This would allow the firm to use free cash flows to pay down debt over time.

Its best chance may be a technology-oriented private equity fund.

Goldman Sachs has been busy over the last month. Reports indicate that WeWork has rushed to Goldman Sachs in the wake of its collapsed IPO. The work-sharing space is reportedly talking to Goldman Sachs and JPMorgan to stave off its cash crunch.

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January 29, 2020

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