Friends and business partners, Gary Guseinov and Sean Whiteley keenly understand the worlds of cybersecurity and entrepreneurship. They know what it takes to work side by side with a private equity firm and are laser-focused on profitability. With the backing and guidance of Corbel Capital Partners, an independent investment firm that makes structured debt and equity non-control investments, and enhanced by a financing partnership with Sunflower Bank, Gary and Sean are successfully growing RealDefense, their cybersecurity business. This growth comes through strategic acquisitions and an R&D-based bundled services model.
Headquartered in Pasadena, CA, RealDefense develops and markets privacy, security and optimization technologies and services used by consumers and small businesses. Its flagship brands include iolo System Mechanic® and SUPERAntiSpyware®. With a commitment to customer satisfaction, RealDefense consistently earns top ratings from PC Magazine and today protects over three million customers. In addition to selling directly to consumers, RealDefense holds strategic partnerships with leading brands, providing white-labeled privacy, security, and productivity optimization features and services that enhance existing products. Partners can provide features and services as aftermarket add-ons or embed software into their go-to-market solutions.
The path to business success hasn’t always been a straight one. In fact, like a boomerang, it’s one that came back around.
From Old to New Again
Gary’s passion for technology and background in private equity and startups led him to found the business in 2004 under the name CyberDefender. Under his leadership it skyrocketed on a rapid growth trajectory. CyberDefender grew from zero to around $70 million in revenue in a five-year timeframe before Gary took the company public on NASDAQ based on his investor's desires.
After running all aspects of CyberDefender for many years, Gary recognized that as a public company the business was in a period of transition. Its focus needed to be ramping up sales and customer service, and so Gary chose to step back and let new leadership take the reins. This led to direct marketing conglomerate Guthy-Renker acquiring CyberDefender with the intent to leverage its direct-to-consumer sales and customer support expertise.
As the new ownership shifted business investment into marketing and advertising over technological innovation, product offerings stopped advancing with the industry. Seeing this Gary approached his friend of more than 20 years, Sean Whiteley, along with Corbel Capital Partners and Broadstream Capital Partners with a plan to buy back the business and turn it back into a technology leader. Working together, the group did just that, purchasing CyberDefender back from Guthy-Renker in 2017. With this fresh start and a new vision for the future, they reinvented the business and were profitable from day one.
Profit First, Always
With CyberDefender back under their management as a private company now called RealDefense, Gary and Sean took the declining entity and turned it into a growing one. What made the difference in the company’s trajectory this time was Corbel Capital Partners' directive to put profits first and foremost instead of taking on debt for the sake of growth.
“Corbel Capital Partners are not venture capitalists,” said Gary. “They don’t tell us to grow the business to show consistent growth quarter to quarter. They direct us to stay profitable. To pay back our debts and liabilities and make sure to manage the businesses to be able to do that in the foreseeable future.”
This advice is very different from the direction provided by Gary’s venture capitalist investors in 2004, and it’s one Gary and Sean appreciate. The partnership they’ve formed with Corbel Capital Partners has been invaluable. As operators, they talk with Corbel’s team multiple times a day. The firm is intimately involved in the company, and Gary and Sean look to Corbel for strategic advice on what’s around the corner and what types of financial investments will be needed to continue growing the business.
It was Corbel who advised Gary and Sean in 2020 to investigate an additional financial partner with the proper capital stack to help them acquire iolo System Mechanic®, a technology firm that develops patented technology and software that repairs, optimizes, and protects computers to keep them running fast and reliably. That’s when RealDefense first discovered Sunflower Bank.
Funding an Acquisition Strategy
To grow profitably, RealDefense had embarked on an acquisition strategy. Gary and Sean find complementary tech companies that fit their target profile: ones that are struggling, not growing, or too small to fit the typical profile desired by a private equity investor. They purchase these companies and add their own playbook to each of the transactions, providing great synergies and value. Then they implement a robust bundled software and services strategy that allows the business to see yearly/monthly recurring revenue, lift average order value and lifetime value, and reduce customer acquisition costs. To date, they have made six acquisitions, with iolo, being one of the largest.
In 2020, COVID-19 brought more than a deadly pandemic to the forefront, it also created a breeding ground for cybersecurity villains. In response, the home cybersecurity business was booming, and a successful iolo acquisition could be a game changer for RealDefense. So, Gary and Sean interviewed several banking partners to access additional capital, including Sunflower Bank.
“Sunflower Bank moved much faster than the other entities we interviewed,” said Gary. “That is extremely important when I’m working on an acquisition. It is make or break. I have a fixed period to get the deal done. It’s very challenging to get that done in time. So, the banker must be very much on point and work with us quickly to go through our diligence process, understand our legal documents and fit everything into the given criteria. Sunflower did that. That was not the case with other entities.”
In addition to finding Sunflower Bank to be faster than others, Gary and Sean appreciated that the bank is easy and transparent to work with.
“Sunflower was flexible and reasonable with expectations and due diligence requests,” said Gary. “They always found a way to get the job done instead of simply saying ‘no,’ when challenges or communication requests arose.”
The Power of Teamwork
Since the iolo acquisition, RealDefense and Sunflower Bank have both grown their scope of services. While the initial financing was structured by the bank’s Leveraged Finance team in Denver, today the RealDefense relationship is managed by Sunflower Bank’s specialized Technology, Media & Telecommunications lending group in Dallas. The importance of relationships remains front and center as the group uses their collective know-how to make deals, including a dividend recap, happen quickly and efficiently. In the case of the dividend recap, it took an unheard of two weeks, much less time than a typical transaction.
“It’s a really big success and shows the power of teamwork,” said Summer Xie, Corporate Banker and relationship lead, when speaking of the Sunflower Bank team working with Gary and Sean to close deals.
Continued Expansion on the Horizon
Today, cybersecurity remains as relevant as it was in 2020 and RealDefense continues to be on the leading edge of the field through R&D and its acquisition strategy. Sunflower Bank is by its side providing additional financing to accelerate corporate acquisitions and strengthen the balance sheet.
As the company looks toward the future, further acquisitions, including European brands, are on the horizon. All of which will help the company broaden its international presence in places including the Middle East and Africa.
As RealDefense expands its footprint and portfolio, Sunflower Bank looks forward to working with them as a trusted financial partner to help the company reach its acquisition and business goals.
Looking for business banking and financing to turn your goals into reality? Reach out to one of our bankers today.
Learn more about Sunflower Bank's Commercial and Specialty Banking
