The Boston-based company, which is being advised by Goldman Sachs and JPMorgan, is in early-stage talks with private equity firms including Advent, Bain Capital and EQT, and is exploring a potential sale, the sources said, requesting anonymity as the discussions are confidential.
The discussions may not lead to a deal and Rapid7 could opt to stay independent, the sources added.
Rapid7’s shares jumped more than 9% on Monday on the news, before paring some gains to close up over 4%.
This is not the first time Rapid7 has attracted acquisition interest. Last year, the company explored its options after fielding interest from potential suitors, Reuters reported, before the talks fizzled out.
Rapid7, Advent, Bain, EQT and JPMorgan declined to comment. Goldman Sachs did not immediately respond to Reuters requests for comment.
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The discussions come at a time when Rapid7 faces pressure from activist investor Jana Partners, which has built a 5.8% stake in the company and urged it to explore a sale. Rapid7 specializes in so-called vulnerability management, providing software tools and services that help businesses assess and monitor security risks. It has been forced to compete harder for business as corporate clients have cut back on security spending due to broader macroeconomic uncertainty.
The company’s shares were down about 32% this year before Friday’s close, underperforming the S&P 500 systems software index, which has risen more than 17% during the same period.
Rapid7 competes in the vulnerability management market against larger rivals such as Tenable, which has also been exploring a sale, and Qualys.
Private-equity firms have been prolific investors in the cybersecurity sector in recent years. In November 2021, an investor consortium led by Advent International acquired McAfee Corp for $14 billion. In 2022, Vista Equity took cybersecurity firm KnowBe4 private in a deal worth $4.6 billion.
