Austin, Tex.-based cybersecurity and privacy consulting firm CynergisTek has been acquired by Auxilio, Inc., a provider of document workflow solutions and IT security services based in Mission Viejo, California, in a deal valued at up to $34.3 million.
According to a press release from Auxilio acquired the consulting firm for initial consideration of approximately $26.8 million in combined cash, stock, and seller debt. “Additional “earn outs” may be paid of up to $7.5 million over the next five years based on certain financial criteria being met,” company officials stated. Additionally, company officials stated that the acquisition “will enable the company to meet growing demand from healthcare customers for comprehensive IT security solutions that reduce risk and deliver long-term value.”
CynergisTek generated approximately $15 million in revenues and $5 million of EBITDA in 2016, according to the press release.
CynergisTek will continue to operate independently as a wholly-owned subsidiary of Auxilio, and, as part of the deal, Auxilio’s Redspin division will become part of CynergisTek, to complement existing offerings such as penetration testing, security assessment and risk management solutions, and to bolster technical resources and capabilities.
CynergisTek co-founders Mac McMillan and Michael Mathews, Ph.D., launched CynergisTek in 2004. The company was recognized in the 2016 KLAS Security Advisory Services report for having the highest overall client satisfaction, performance and impact on security preparedness in healthcare. McMillan, currently CynergisTek CEO, and Mathews, currently president and COO, will take board positions in the combined entity and assume a significant ownership stake.
“With assets from Auxilio, we’ll have what we need to extend our offerings and to keep pace with market demand while simultaneously maintaining the superior level of client support we’ve become known for,” McMillan said in a statement. “Our clients recognize that document and device security are important components of their overall security risk profile and the ability to deliver an integrated approach to managing those aspects of their infrastructure along with the digital pieces we’ve traditionally focused on is something we are laying the foundation for now.”
Joe Flynn, CEO of Auxilio, said in a prepared statement, “We have long stated our desire to expand our reach in healthcare IT security and this acquisition puts us in an immediate leadership position in the category. We have come to know the founders and employees of CynergisTek quite well over the last couple of years and from the earliest conversations it was obvious we shared a vision of what the future of healthcare IT security and document workflow looked like and how the two will become increasingly intertwined. While CynergisTek will continue to operate independently, there are numerous opportunities for mutually assisted growth over the near term and we foresee the ability to offer services under a combined umbrella over time. This is a truly unique fit and we could not be more excited to complete this transaction.”
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