Tech security companies are hot acquisitions

SEATTLE -- Despite Wall Street's struggles, big bets continue to be made in one seemingly recession-resistant industry: tech security.

That makes 55 acquisitions of security firms in 2009, a pace that could surpass the 120 security companies snapped up in 2008, according to America's Growth Capital (AGC).

"There is a surge of activity going on," says Ben Howe, CEO at AGC.

Prices are attractive because the venture capitalists who invested in promising security start-ups a few years ago can no longer count on cashing in by going public, because the market for initial public offerings has dried up, says Jay Beaghan, managing director for security acquisitions at Imperial Capital.

Yet, cybercriminals continue to infect e-mail, Web pages and social networks with data-stealing programs and financial scams. Cyberspies are increasingly cracking into databases at companies and government agencies to swipe sensitive commercial and military data.

"Hackers and bad guys continue to innovate," says Beaghan. "This supports an ongoing level of investment activity in the sector."

Meanwhile, expectations are running high in the tech-security, military and intelligence communities that the federal government will begin to spend more on cybersecurity. And President Obama is widely expected to usher in new policies to compel the corporate sector to beef up cyberdefenses, as well.

"The government is starting to better protect its own systems," says Amit Yoran, CEO of security firm NetWitness. "Ultimately, the mind-set that security matters will translate into new regulations and programs affecting private industry."