As filed with the Securities and Exchange Commission on November 18, 2016.

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Optiv Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware

7373

37-1768969

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

1125 17th Street, Suite 1700

Denver, Colorado 80202

Telephone: (303) 298-0600

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

William H. Croutch

Senior Vice President and General Counsel

Optiv Inc.

6130 Sprint Parkway, Suite 400

Overland Park, Kansas 66211

Telephone: (816) 421-6611

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Edgar J. Lewandowski

Risë B. Norman

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017-3954

Telephone: (212) 455-2000

Joshua N. Korff

Ross M. Leff

Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Telephone: (212) 446-4800

Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after the Registration Statement is declared effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	¨

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price⁽¹⁾⁽²⁾	Amount of Registration Fee
Common Stock, par value $0.01 per share	$100,000,000	$11,590.00

(1)	Estimated solely for the purpose of determining the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933.

(2)	Includes shares of common stock that the underwriters have the option to purchase to cover over-allotments, if any.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

LOGO

The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and neither we nor the selling stockholders are soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to completion, dated November 18, 2016
Preliminary Prospectus
             Shares
[Graphic]
Optiv Inc.
COMMON STOCK
Optiv Inc. is offering              shares of common stock and the selling stockholders are offering              shares. We will not receive any proceeds from the sale of shares by the selling stockholders. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $             and $             per share.
We have applied to list our common stock on the New York Stock Exchange under the symbol “OPTV.”
After the completion of this offering, our Sponsors (as defined herein) will continue to own a majority of the voting power of shares eligible to vote in the election of our directors. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the NYSE. See “Management—Controlled Company Exception” and “Principal and Selling Stockholders.”
We are an “emerging growth company” under the federal securities laws. Investing in our common stock involves risks. See “Risk Factors” beginning on page 17.
PRICE $             A SHARE
Price to Public
Underwriting Discounts and Commissions(1)
Proceeds to Optiv
Proceeds to Selling Stockholders
Per Share
$
$
$
$
Total
$
$
$
$
(1) See “Underwriting (Conflicts of Interest)” for additional information regarding underwriting compensation.
The Selling Stockholders have granted the underwriters the right to purchase up to an additional              shares of common stock to cover over-allotments.
The Securities and Exchange Commission and state securities regulators have not approved or disapproved of the securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the shares of common stock to purchasers on              , 2016.
MORGAN STANLEY
GOLDMAN, SACHS & CO.
BARCLAYS
CITIGROUP
Blackstone Capital Markets
Raymond James
William Blair
Evercore ISI
Guggenheim Securities
PJT Partners LP
                 , 2016

LOGO

TABLE OF CONTENTS


	Page
Summary		1
Risk Factors		17
Forward-Looking Statements		37
Market and Industry Data		38
Trademarks, Service Marks and Trade Names		39
Use of Proceeds		40
Dividend Policy		41
Capitalization		42
Dilution		43
Unaudited Pro Forma Consolidated Financial Information		44
Selected Historical Consolidated Financial Data		55
Management’s Discussion and Analysis of Financial Condition and Results of Operations		58
Business		111


	Page
Management		128
Executive and Director Compensation		136
Certain Relationships and Related Person Transactions		154
Principal and Selling Stockholders		159
Description of Certain Indebtedness		161
Description of Capital Stock		167
Material United States Federal Income and Estate Tax Consequences to Non-U.S. Holders		175
Certain ERISA Considerations		178
Shares Eligible for Future Sale		180
Underwriting (Conflicts of Interest)		182
Legal Matters		191
Experts		191
Where You Can Find More Information		191
Index to Financial Statements		F-1

Neither we, the selling stockholders nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus, any amendment or supplement to this prospectus or in any free writing prospectuses we have prepared. We and the selling stockholders take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the selling stockholders are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

Through and including , 2016 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

For investors outside the United States: Neither we, the selling stockholders nor the underwriters have done anything that would permit our initial public offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our common stock and the distribution of this prospectus outside of the United States.

Unless the context suggests otherwise, references in this prospectus to “Optiv,” the “Company,” “we,” “us” and “our” refer to Optiv Inc. and its consolidated subsidiaries. References to “Accuvant” refer to Accuvant Holdings Corporation and its subsidiaries, and references to “FishNet Security” refer to Firewall Acquisition Holdings, Inc. (“Firewall”) and its subsidiaries, including FishNet Holdings, Inc. On January 28, 2015, Optiv completed a transaction whereby AHC Merger Sub Inc. and FN Merger Sub Inc., each a wholly-owned, indirect

subsidiary of Optiv, simultaneously merged with and into Accuvant and FishNet Security, respectively, with Accuvant and FishNet Security surviving their respective mergers. Accuvant is our predecessor for accounting purposes. This prospectus includes audited financial statements of FishNet Holdings, Inc. for the fiscal years ended December 31, 2014 and 2013. The only differences of note between the financial statements of FishNet Holdings, Inc. and the financial statements of its parent, Firewall, are a result of certain indebtedness incurred by Firewall, all of which was repaid in connection with the FishNet Security Merger (as defined herein). Investment funds associated with or designated by The Blackstone Group L.P., our current majority owners following the Accuvant/Blackstone Transaction (as defined herein), are referred to herein as “Blackstone,” Blackstone and affiliates of Investcorp Bank BSC (“Investcorp”) and Sverica International Investment Fund III LP (“Sverica”) are referred to as “our Sponsors” and our Sponsors, together with the other owners of Optiv Inc. prior to this offering, are collectively referred to as our “pre-IPO owners.” See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Significant Transactions” for a description of the Accuvant/Blackstone Transaction and the FishNet Security Merger.

Unless indicated otherwise, the information included in this prospectus assumes no exercise by the underwriters of their over-allotment option to purchase up to an additional shares of common stock from the selling stockholders and that the shares of common stock to be sold in this offering are sold at $ per share of common stock, which is the midpoint of the price range indicated on the front cover of this prospectus.

SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in shares of our common stock. You should read this entire prospectus carefully, including the section entitled “Risk Factors” and the financial statements and the related notes thereto included elsewhere in this prospectus, before you decide to invest in shares of our common stock.

OPTIV INC.

Overview

We are a market-leading provider of end-to-end cyber security solutions, ranked in the top 10% of solution providers by revenue according to the CRN Solution Provider 500. We exclusively focus on cyber security and leverage our proprietary technologies, intellectual property, third-party products, market intelligence and scalable platform to provide comprehensive and optimized solutions to our clients. Our team of over 1,700 employees includes over 1,300 cyber security experts who plan, build and run cyber security programs tailored to our clients’ needs. Through our strong partnerships with over 400 established and emerging security software providers and hardware manufacturers, we offer our clients a broad portfolio of cyber security products and services, along with strategic advice and ongoing management of their security infrastructure. The broad portfolio of products and services available to us allows us to be “vendor-agnostic,” in that we are free to select the products and services we believe best meet our clients’ needs, rather than being compelled to sell products we develop internally or that are supplied by a limited pool of available vendors. Formed through the merger of Accuvant and FishNet Security, we believe we are the largest pure-play, vendor-agnostic cyber security solutions provider in North America—more than five times larger than our next-largest comparable competitor based on 2014 revenue and the CRN Solution Provider 500 list. Over the past three years, our diversified, blue-chip client base has included 71 of the Fortune 100 and 604 of the Fortune 1000, and we have served over 7,500 clients in 76 countries.

Cyber attacks have impacted nearly every organization, placing cyber security as a top priority for senior executives and boards of directors. Cyber attacks continue to increase and have evolved into highly sophisticated global, automated and organized attacks by criminal syndicates and nation-states that have resulted in significant reputational, financial and political damage. These attacks are frequent, visible and costly. In addition, technology trends, such as cloud computing, mobility and the Internet of Things (“IoT”), are driving organizations to rethink their security framework to protect against new entry points of attack. Historically, organizations have responded to cyber crime tactically by purchasing more point solutions. Over the past five years, the number of publicly-traded cyber security point-solution vendors has more than doubled, and, according to a July 2016 report from CB Insights, $10.9 billion was invested in over 1,200 private cyber security startups from 2012 to July 2016, making the landscape more fragmented and confusing for organizations. Despite more spending on fragmented solutions, cyber crime incidents continue to accelerate in frequency. We believe technology alone is not the solution and that organizations realize that they need a strategic, programmatic approach to cyber crime. This involves developing a plan, implementing products and services and continuously monitoring and adapting that plan based on new threat intelligence. Organizations increasingly want a single provider to plan, build and run their comprehensive security environment and combine point offerings from various providers into an integrated, holistic solution.

We solve this problem for our clients through our comprehensive, consultative and unified approach to cyber security. As their trusted advisor, we believe our clients view us as an extension of their own teams and rely on our expertise in designing and executing security programs that are aligned with their business objectives. Our end-to-end integrated security solutions address every major domain of cyber security. We have two reportable segments: Security Technology and Security Services. Through our Security Technology business, we provide our clients a complete range of security product advice and services, including client needs analyses, product evaluation and testing, product procurement and security vendor management. We also help implement

and integrate these products into their networks. Our Security Services business consists of security consulting, security operations, managed security services (“MSS”), incident response, support services and strategic staffing. We manage and monitor our clients’ security operations 24x7 from our three security operations centers (“SOCs”). Through our security consulting business, we advise clients on designing and executing an overall security strategy, which utilizes our knowledge base of the threat landscape and available solutions. At the core of our platform are our proprietary technologies, processes and intellectual property (“IP”) that serve as the foundation for our integrated businesses. We are well-positioned to understand all of the components of a security strategy—problems, threats, issues, options, products and techniques—because of the depth and breadth of our platform and our lifecycle approach to serving clients. We apply the insights gained from one client situation to other clients in similar situations, which allows us to quickly multiply our insights and advice. As we accumulate more data and greater insights, we better serve our clients over time through the information we obtain and reinforce our value to clients and vendor partners.

Our vendor partner ecosystem includes over 400 established and emerging cyber security software providers and hardware manufacturers, giving us access to thousands of technology options for our clients. We objectively evaluate new technologies as they become available to ensure that our cyber security experts are able to identify the appropriate solutions for each client. We also provide our clients with commercial insights in the form of consultations, workshops, technology reviews, research results, best practices and visibility into integration and interoperability with multi-vendor technologies. Our role in designing our clients’ emerging security infrastructure positions us to evaluate new technologies and establish early relationships with product vendors.

We deploy a differentiated client engagement model designed to manage and grow client relationships and guide our clients to plan, build and run successful programs. We have a large team of multi-disciplined, client-facing personnel that brings clients valuable capabilities and team extensions. We design our teams around our clients and provide expertise and engagement throughout the lifecycle of projects. As of September 30, 2016, we had over 1,700 employees, with over 1,300 security experts, including over 290 client managers and over 250 client advisors. Our Office of the CISO offers our clients advisory services from seasoned Chief Information Security Officers (“CISOs”) and subject-matter expert advisors who help create security strategies and provide industry-wide thought leadership and best practices. We address every major cyber security domain, spanning multiple levels of engagement, largely due to the diverse experiences of our people. We employ ex-CISOs, white hat hackers, engineers, architects, strategists, researchers, developers and compliance experts. Together, we have served over 7,500 clients over the past three years. We have been successful in expanding our business with clients over time. Over the six years ended September 30, 2016, on average, our returning clients have spent nearly twice as much with us in the second year of our relationship.

On an historical basis, without giving effect to the FishNet Security Merger for the period from January 1 to January 28, 2015, our revenue for the year ended December 31, 2015 was $947.3 million and our revenue for the nine months ended September 30, 2016 was $643.8 million. We are in the process of assessing the impact of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), on our consolidated financial statements. Our assessment is not complete. However, if there were a change from presenting all products revenue from a gross to net basis due to adoption of the new standard, we estimate our revenue for the year ended December 31, 2015 would have been $404.4 million and our revenue for the nine months ended September 30, 2016 would have been $336.2 million. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Accounting Pronouncements” on pages 99 and 100 for additional detail. The actual effects of adopting ASU 2014-09 on our reported results of operations may differ materially. For the year ended December 31, 2015, we had a net loss of $14.4 million and for the nine months ended September 30, 2016, we had a net loss of $5.7 million. Our Adjusted EBITDA for the year ended December 31, 2015 and the nine months ended September 30, 2016 was $97.5 million and $61.2 million, respectively. See “—Summary Historical and Pro Forma Financial and Other Data” for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income (loss).

On a pro forma basis, after giving effect to the FishNet Security Merger and the other Transactions as described under “Unaudited Pro Forma Consolidated Financial Information,” for the year ended December 31, 2015, our revenue was $972.6 million, and we had a net loss of $5.6 million. On this same pro forma basis, for the year ended December 31, 2015, our Adjusted EBITDA was $96.4 million.

Industry Background

Cyber Security is Mission Critical and at the Forefront of Technology Needs for Enterprises of All Sizes

Cyber security is one of the highest priorities for enterprises of all sizes. The accelerating adoption of new technologies, such as cloud computing, mobility and IoT is increasing the surface area of exposure. According to Cisco, by 2020, it is predicted that 50 billion devices will be network connected. As the surface area of exposure increases, and breaches become more damaging and visible in the public domain, security becomes a higher priority for Chief Information Officers (“CIOs”), senior executives and boards of directors. Today, organizations are allocating a greater proportion of information technology (“IT”) budgets toward security to preserve brand, reputation and overall business operations.

The Economic Damage from Cyber Crime is Substantial and Increasing Rapidly

An estimated 97% of businesses have been breached, according to a 2014 study by FireEye, Inc. Today, cyber criminals often act in concert, have political, monetary or even terrorist motivations, are sophisticated in their coordination, preparation and planning, and are equipped to cause extensive damage. According to a 2014 McKinsey report, between $9 trillion and $21 trillion of global economic value creation in the next five to seven years could be at risk if organizations and governments are unable to adopt successful strategies to combat cyber threats. Despite the rising spend on security solutions and compliance measures, the number of breaches continues to increase.

Traditional Approaches to Ensuring an Organization’s Security Have Not Led to a Reduction in Cyber Crime Incidents

Traditional approaches to solving cyber security problems have been largely tactical, with companies purchasing a greater number of point products. Our work and research with our clients lead us to believe that large-scale organizations have a multitude of products and technologies, many of which are partially or ineffectively deployed and do not integrate well with other systems. With the growing threat landscape and rapidly increasing number of vendors, organizations are increasingly unable to stay current with the most recent threats, products, vendors and industry advancements. To be effective, organizations must approach security strategically, and an effective strategic security framework must holistically combine products, policies, procedures and controls, all aligned with the organization’s business priorities.

Many Organizations Lack the Expertise, Resources and Time to Effectively Design and Run Their Own Security Infrastructure

Many organizations lack the qualified security personnel with the knowledge to design, implement and manage the hybrid security offerings that exist in the market today, and specialized cyber security personnel are scarce. Internal security functions are often run by IT technicians without specialized security training who lack the ability to design complex security programs. Without sufficient bandwidth or internal resources to design and run their own security systems, organizations increasingly look to outside resources to address more of their cyber security needs. According to a 451 Research study, based on responses from over 1,000 IT professionals, security managers reported significant obstacles in implementing desired security projects due to lack of staff expertise (35%) and inadequate staffing (26%), with only 24% reporting that their enterprises have 24×7 monitoring of their technology systems in place using internal resources.

Organizations Must Choose from an Increasingly Fragmented Landscape of Providers

The cyber security landscape consists of highly fragmented categories of product and service providers that focus on a specific area within security. Organizations must not only choose from within each category but also implement and integrate solutions from various vendors. The landscape is comprised of the following categories of primarily point solution providers:

Product manufacturers. Product manufacturers offer individual products and product suites that generally address a targeted subset of cyber security risks. By nature, manufacturers are incentivized to sell their products and promote their offerings, which may not be the optimal solution for a client’s existing infrastructure or long-term security roadmap.

Managed security service providers (“MSSPs”). Clients use MSSPs to host and monitor their infrastructure at a lower cost than using internal resources. Typically, MSSPs only provide monitoring services for existing infrastructure and do not have the ability to use real-time threat intelligence to stop attacks. Further, most MSSPs operate in silos and, therefore, cannot incorporate data from other sources to react to threats in real time.

Pure-play cyber security consultants. Pure-play cyber security consultants provide project-based services to help organizations with architecture, product implementation, testing and assessment and compliance. They tend to be small, specialized and focused on only one area of security. This market is highly fragmented with numerous specialized players.

Cyber security consulting divisions of larger IT and consulting companies. Many large technology and consulting firms have add-on cyber security divisions that are not the core focus of their companies. Management consulting firms are typically focused on providing advice to executives on architecture selection and design but rarely perform deployments, integration and implementations. IT companies generally use consulting as a channel for their other products and services and often lack industry expertise across domains.

Distributors. Distributors provide third-party products to end clients. Most distributors focus on lower margin fulfillment services for a catalog of various products but typically lack advisory services and in-depth cyber security knowledge.

Given the accelerating frequency and complexity of cyber risks, organizations are seeking an end-to-end cyber security solutions provider at scale that has awareness over every domain of cyber security and the ability to execute a comprehensive security strategy.

Our Market Opportunity

We believe our ability to provide holistic, end-to-end cyber security solutions enables us to broadly address the global enterprise information security market, which is expected to be a $88.8 billion market in 2016 according to Gartner. Within this broader market, the security services market, which includes security consulting, hardware support, implementation and IT outsourcing, is expected to grow from $55.9 billion in 2016 to $78.1 billion in 2020, representing a compound annual growth rate of 9%, and the security hardware and software products market, which is comprised of identity access management, infrastructure protection and network security equipment, is expected to grow from $32.9 billion in 2016 to $42.7 billion in 2020, representing a compound annual growth rate of 7%.

We believe our top technology vendor partners derive the majority of their revenue through a third-party channel, and we expect this to increase over time.

For the security services market, a significant portion of our future opportunity relates to spending on outsourced security services. We believe our clients and potential clients are increasingly recognizing the need to depend on external security experts to manage their cyber security operations. Gartner estimates that, by 2019, total enterprise spending on security outsourcing services will be 75% of the spending on security software and hardware products, up from 50% in 2015.

Our Solutions

We are a leading provider of cyber security services and integrated solutions for organizations. We help organizations address their full range of cyber risk and security needs in a customized and integrated fashion through a holistic, lifecycle and strategic approach. The key benefits of our solutions include:

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Programmatic approach to security. We offer a comprehensive security framework for our clients and take a strategic approach to designing and executing security solutions through our consultative, technology-neutral approach. Our large partner ecosystem provides us with a vast toolkit, which allows us to select the solutions that best meet our clients’ needs, rather than limiting our and our clients’ options to the products of any individual product vendor.

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Industry-leading expertise and diversity of our client-facing employees. Our employees come from a broad range of professional and technical backgrounds and include over 1,300 cyber security experts consisting of ex-CISOs, engineers, architects, strategists, researchers, analysts and risk and compliance experts. We also have the Office of the CISO, which is specifically designed to partner with our clients’ CISOs to provide advice and leadership in building best-of-breed security practices in organizations.

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Comprehensive cyber security solutions. Our comprehensive solutions cover every major domain of cyber security, and our business model enables us to operate as a single-source solution provider for our clients. We help our clients solve their problems in an integrated and customized way, addressing the full lifecycle of their needs. Our end-to-end cyber security solutions are created from our nearly 20 years in the cyber security industry and the collective experience of our cyber security experts.

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Differentiated and proprietary technology platforms. We have developed and employ hundreds of proprietary tools, scripts (small custom software), processes and methodologies, including intellectual and proprietary capital, to support the numerous services we offer. These tools are created by subject-matter experts within each practice and represent the institutionalization of our knowledge and intellectual capital, allowing us to continue to deliver high-impact services at scale.

Our Competitive Strengths

We have several competitive advantages that will enable us to maintain and extend our leadership position in cyber security solutions. Our key competitive strengths include:

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100% focus on cyber security. We believe our clients and vendor partners recognize our leading position and value our expertise. Our singular focus allows us to stay ahead of the latest innovations in security, giving us a sustainable advantage. We actively maintain in-depth expertise across all three cornerstone domains of security: consulting, operations and technology, setting us apart from our competition.

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Leadership position in providing comprehensive security solutions. We believe we are the largest pure-play cyber security solutions company, with over $972.6 million of revenue on a pro forma basis in 2015, over 7,500 clients in the three years ended September 30, 2016, more than 400 technology vendor partners and over 1,700 employees. Our scale provides greater reach to clients, the ability to cover a large vendor partner network and a vast knowledge base into security threats from our extensive client network.

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Diversified, blue-chip client base. Over the past three years, our clients have included 71 of the Fortune 100 companies and 604 of the Fortune 1000 companies. We serve large and sophisticated clients across a broad range of industries and believe that our diversified, blue-chip client base gives us superior visibility into the threat landscape and minimizes our exposure to the risk of any particular client industry.

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Significant network effects. Our business model benefits from significant network effects that reinforce our leadership. Given our broad client reach, we have visibility into a wide variety of cyber security threats and attack vectors, which we use along with threat intelligence from our MSS and consulting businesses to protect our clients. We are thus able to quickly multiply our insights and advice, which in turn makes us more attractive to clients. As we grow our client base, we believe we become more attractive to vendor partners and prospective employees, reinforcing our leadership.

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Access to a broad set of established and emerging security vendors without single vendor risk. We partner with over 400 security vendors across every major aspect of cyber security, including well-established firms as well as small emerging vendors. Our position enables us to identify and assess the most promising emerging technologies and capitalize on established technologies. We are well-positioned to benefit from the overall growth of the security technology industry, without the potential downside of a concentrated technology risk from a single vendor.

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Founder-led management team with significant cyber security experience. Our Chief Executive Officer, Daniel D. Burns, founded Accuvant over 13 years ago and continues to lead our management team with his clear and strategic vision. Key members of our senior-level management team have been with the predecessor companies of Optiv for over 10 years. We believe that our management team and cyber security talent position us to continue to provide thought leadership and drive innovation.

Our Growth Strategy

The following are key elements of our strategy to become the world’s most advanced, comprehensive and trusted partner for cyber security solutions.

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Expand within our existing client base. We believe we have a significant opportunity to increase penetration in our existing client base, where we believe we have less than 10% of their current cyber security spend. Our increasing portfolio of solutions provides a significant opportunity to upsell and cross-sell incremental security services and technologies.

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Expand our consulting, managed security and security operations offerings. We plan to enhance our current offerings by adding new services and expand our offerings in new, emerging areas of the industry based on evolving threats and client needs. We have consistently added new offerings, and we intend to continue to improve our offerings by adding people, infrastructure and technology.

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Develop proprietary technology and intellectual property. We plan to expand our investments in software tools, data analytics and industry intelligence, as well as new processes and methods to deliver more effective and efficient solutions to our clients. We intend to enhance our proprietary tools and extensive knowledge base to sustain our significant advantages in the market.

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Attract new clients. We operate in a large and highly fragmented market and are well positioned to grow our current market share of less than 5%. We plan to continue investing in our field-based client engagement organization and expand awareness of the Optiv brand to highlight our scale, the scope of our domain expertise and our core capabilities to continue to attract new clients.

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Expand our global footprint. We have a proven model of growth among our large clients with global operations, and we intend to leverage that model and our relationships with our vendor partners to expand globally. We plan to pursue clients internationally through partnerships with regional vendors

and by opening more offices outside the United States. In addition, we may consider selectively pursuing strategic acquisitions in targeted geographies where established players have a significant brand, product offering or client base.

Our Sponsors

Blackstone (NYSE: BX) is one of the world’s leading investment firms. Blackstone’s alternative asset management businesses include the management of corporate private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. Through its different businesses, Blackstone had total assets under management of approximately $361.0 billion as of September 30, 2016.

Investcorp is a leading provider and manager of alternative investment products and is publicly traded on the Bahrain Bourse (INVCORP). The Investcorp Group has offices in Bahrain, New York, London, Riyadh, Abu Dhabi and Doha. Investcorp has three business areas: corporate investment in the United States, Europe and the Ara Gulf, real estate investment in the United States and global hedge funds. As at September 30, 2016, the Investcorp Group had $10.8 billion in total assets under management, including assets managed by third-party managers where Investcorp receives fees calculated on the basis of total assets under management.

Sverica is the successor to Sverica International, which was founded in 1993. Sverica is a leading private equity firm that has raised over $500 million of investment capital and focuses on lower middle market buy-outs. Sverica invests in and works closely with management teams and builds companies that are or could become leaders in their industries. As a firm founded by former operators, Sverica partners with talented executives while devoting significant internal resources to help its portfolio management teams create and execute growth strategies.

After the completion of this offering, our Sponsors will own % of our common stock, or % if the underwriters exercise their over-allotment option in full. As a result, we will be a “controlled company” within the meaning of the NYSE corporate governance standards. Under these corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards, including the requirements (1) that a majority of our board of directors consist of independent directors, (2) that our board of directors have a compensation committee that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and (3) that our board of directors have a nominating and corporate governance committee that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. For at least some period following this offering, we intend to utilize these exemptions. As a result, immediately following this offering, we do not expect a majority of our directors will be independent or that our compensation committee or nominating and corporate governance committee to be comprised entirely of independent directors. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of these corporate governance requirements. In the event that we cease to be a “controlled company” and our shares continue to be listed on the NYSE, we will be required to comply with these provisions within the applicable transition periods.

Investment Risks

An investment in shares of our common stock involves substantial risks and uncertainties that may adversely affect our business, financial condition and results of operations and cash flows. Some of the more significant challenges and risks relating to an investment in our Company include, among other things, the following:

•

Our client engagement cycles can be long and unpredictable, and our client engagement efforts require considerable time and expense. As a result, our revenue is difficult to predict and may vary substantially from period to period, which may cause our results of operations to fluctuate significantly.

•

If we are unable to sell additional cyber security solutions to, or renew our agreements with, our existing clients, our future revenue and operating results will be harmed.

•

If we are unable to attract new clients, our future revenue and operating results will be harmed.

•

If we fail to meet our service level obligations under our service level agreements, we may be subject to certain penalties and could lose clients.

•

Our computer networks and information systems could experience security breaches or denial of service attacks that may disrupt our services and adversely affect our results of operations. We could face liability or reputational damage if we fail to protect client or Optiv data or information systems or if our information systems are breached or rendered inoperable.

•

Breaches or denial of service attacks experienced by our clients could result in litigation and other liability to us and could damage our brand.

•

Our recent combination of Accuvant and FishNet Security creates integration challenges for our business, which could cause our business to suffer.

•

We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition and results of operations.

•

We could experience material changes to the agreements with our vendor partners, including changes to purchase discounts and rebate programs, if certain technology manufacturers consolidate.

•

The cyber security market is rapidly evolving within the increasingly challenging cyber threat landscape. If the industry does not continue to develop as we anticipate, our revenue will not grow as quickly as expected, if at all, and our share price could decline. If we do not accurately predict, prepare for, and respond promptly to the rapidly evolving technological and market developments and changing client needs in the cyber security market, our competitive position and prospects will be harmed.

•

Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations.

•

We believe that our brand is integral to our success. If we fail to cost-effectively promote or protect our brand, our business and competitive position may be harmed.

•

We have observed certain vendor partners and other ecosystem partners expand their service capabilities into areas that directly compete with our service offerings. This creates a unique set of challenges that could materially change our vendor and other relationships.

•

Our substantial leverage could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to changes in the economy or our industry or our ability to pay our debts, and could divert our cash flow from operations to debt payments.

•

Our Sponsors and their respective affiliates control us, and their interests may conflict with ours or yours in the future.

Please see “Risk Factors” for a discussion of these and other factors you should consider before making an investment in shares of our common stock.

Implications of Being an Emerging Growth Company

As a company with less than $1.0 billion in revenue during our most recently completed fiscal year prior to the initial filing date of the registration statement of which this prospectus forms a part, we qualify as an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended (the

“Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies that are not emerging growth companies. These provisions include:

•

presentation of three years of summary historical financial information rather than five years in this prospectus;

•

reduced disclosure about our executive compensation arrangements;

•

no non-binding stockholder advisory votes on executive compensation or golden parachute arrangements; and

•

exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company upon the earliest of: (1) the end of the fiscal year following the fifth anniversary of this offering; (2) the last day of the first fiscal year during which our annual gross revenue was $1.0 billion or more; (3) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (4) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. We have taken advantage of reduced disclosure regarding executive compensation arrangements in this prospectus, and we may choose to take advantage of some but not all of these reduced disclosure obligations in future filings. If we do, the information that we provide stockholders may be different than you might get from other public companies in which you hold stock.

The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to take advantage of this extended transition period, and, as a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are generally applicable to public companies.

Optiv Inc. was incorporated in Delaware on October 23, 2014 under the name AF Security Holdings Corp. On June 22, 2015, we changed our name to Optiv Inc. Our predecessors, FishNet Security and Accuvant, were founded in 1996 and 2002, respectively. Our principal executive offices are located at 1125 17th Street, Suite 1700, Denver, Colorado 80202 and our telephone number is (303) 298-0600.

THE OFFERING

Common stock offered by us

shares.

Common stock offered by the selling stockholders

shares.

Over-allotment option to purchase additional shares from the selling stockholders

shares.

Common stock outstanding after giving effect to this offering

shares.

Use of proceeds

We estimate that the net proceeds to Optiv Inc. from this offering, after deducting estimated underwriting discounts and commissions, will be approximately $ million.

We intend to use the net proceeds from this offering to repay a portion of our outstanding indebtedness and for general corporate purposes.

We will not receive any proceeds from the sale of shares of common stock offered by the selling stockholders (including any sales pursuant to the over-allotment option).

Dividend policy

We have no current plans to pay dividends on our common stock. Any decision to declare and pay dividends in the future will be made at the sole discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. Because we are a holding company and have no direct operations, we will only be able to pay dividends from funds we receive from our subsidiaries. In addition, our ability to pay dividends will be limited by covenants in our existing indebtedness and may be limited by the agreements governing any indebtedness we or our subsidiaries may incur in the future. See “Dividend Policy.”

Risk factors

See “Risk Factors” for a discussion of risks you should carefully consider before deciding to invest in our common stock.

Directed share program

At our request, the underwriters have reserved for sale, at the initial public offering price, up to 5% of the shares of common stock offered by this prospectus for sale to our directors, officers, team members and other individuals associated with us and members of their respective families. These sales will be made by an affiliate of Morgan Stanley & Co. LLC, an underwriter of this offering, through a directed share program. If these persons purchase reserved shares, it will reduce the number of shares of common stock available for sale to the general public. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares of common stock offered by this prospectus. Participants in the directed share program will be subject to a 180-day lock-up restriction with respect to any shares purchased through the directed share program,

which restriction may be waived with the prior written consent of Morgan Stanley & Co. LLC and Goldman, Sachs & Co. See “Underwriting (Conflicts of Interest)—Directed Share Program.”

Conflicts of Interest

Affiliates of Blackstone Advisory Partners L.P. own in excess of 10% of our issued and outstanding common stock. Because Blackstone Advisory Partners L.P. is an underwriter in this offering and its affiliates own in excess of 10% of our issued and outstanding common stock, Blackstone Advisory Partners L.P. is deemed to have a “conflict of interest” under FINRA Rule 5121. Accordingly, this offering is being made in compliance with the requirements of Rule 5121. Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as the members primarily responsible for managing the public offering do not have a conflict of interest, are not affiliates of any member that has a conflict of interest and meet the requirements of paragraph (f)(12)(E) of Rule 5121. See “Underwriting (Conflicts of Interest).”

Proposed NYSE trading symbol

“OPTV.”

In this prospectus, unless otherwise indicated, the number of shares of common stock outstanding and the other information based thereon is based on shares outstanding as of , 2016, and does not reflect:

•

shares of common stock that may be granted under the Optiv Inc. 2016 Omnibus Incentive Plan (the “Omnibus Incentive Plan”). See “Executive and Director Compensation—Optiv Inc. 2016 Omnibus Incentive Plan”;

•

shares of common stock that may be granted under the Amended and Restated 2014 Optiv Inc. Stock Incentive Plan; and

•

shares of common stock that may be granted under the Optiv Inc. 2016 Employee Stock Purchase Plan.

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OTHER DATA

The following tables set forth our summary historical and pro forma consolidated financial and other data for the periods ended and at the dates indicated below. On April 22, 2014, we were acquired by Blackstone. We refer to periods ending on or before April 21, 2014 as the Predecessor period and periods beginning on or after April 22, 2014 as the Successor period. Due to the application of pushdown accounting, the Predecessor period and the Successor period are not comparable.

We derived the summary historical consolidated statements of operations data for the year ended December 31, 2015, the period from April 22, 2014 through December 31, 2014, the period from January 1, 2014 through April 21, 2014 and the year ended December 31, 2013 and the summary balance sheet data as of December 31, 2015 and 2014 from our audited consolidated financial statements included elsewhere in this prospectus. We derived the summary balance sheet data as of December 31, 2013 from our audited consolidated financial statements not included in this prospectus. We derived the summary historical statements of operations data and the summary historical statements of cash flows data for the nine months ended September 30, 2016 and 2015 and the summary balance sheet data as of September 30, 2016 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. We have prepared our unaudited condensed consolidated financial statements on the same basis as our audited financial statements and, in our opinion, have included all adjustments, which includes only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results of any interim period are not necessarily indicative of the results that may be expected for the full year. Additionally, our historical results are not necessarily indicative of the results expected for any future period. Accuvant is our predecessor for accounting purposes.

You should read the summary historical and pro forma financial data below, together with the consolidated financial statements and related notes thereto appearing elsewhere in this prospectus, as well as “Selected Historical Consolidated Financial Data,” “Unaudited Pro Forma Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain Indebtedness,” and the other financial information included elsewhere in this prospectus.

The unaudited summary pro forma financial information has been prepared to give effect to the FishNet Security Merger and the other transactions as described under “Unaudited Pro Forma Consolidated Financial Information” as if they had occurred on January 1, 2015. The following unaudited summary pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the relevant transactions had been consummated on the date indicated, nor is it indicative of future operating results.


	Pro Forma									Historical Information
										Successor												Predecessor
(Dollars in thousands, except per share data)	Nine Months Ended September 30, 2016^(A)			Nine Months Ended September 30, 2015^(A)^(B)			Year Ended December 31, 2015^(A)^(B)			Nine Months Ended September 30, 2016			Nine Months Ended September 30, 2015^(C)			Year Ended December 31, 2015^(C)			Period from April 22 to December 31, 2014^(D)			Period from January 1, 2014 to April 21, 2014^(E)			Year Ended December 31, 2013^(E)
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Summary Statements of Operations Data:
Revenue
Products	$	371,652		$	459,808		$	662,878		$	371,652		$	447,001		$	650,071		$	232,085		$	53,492		$	240,310
Subscriptions, maintenance and support		118,687			85,286			134,810			118,687			83,369			132,893			36,767			10,058			39,590
Security services		153,416			127,971			174,923			153,416			118,107			164,312			53,645			19,203			59,252

Total revenue		643,755			673,065			972,611			643,755			648,477			947,276			322,497			82,753			339,152

Costs of sales:
Products		307,570			385,128			553,870			307,570			374,128			542,870			195,081			44,315			203,831
Security services		96,792			80,919			110,096			96,792			76,928			106,105			34,644			12,811			37,685

Total costs of sales		404,362			466,047			663,966			404,362			451,056			648,975			229,725			57,126			241,516

Gross profit		239,393			207,018			308,645			239,393			197,421			298,301			92,772			25,627			97,636

Operating expenses:
Selling, general and administrative expenses		183,926			158,936			221,381			183,926			151,831			214,276			71,160			24,527			80,883
Amortization of acquired intangibles		16,075			20,938			26,189			16,075			19,939			25,190			6,042			382			1,266
Other expense		9,980			11,936			20,468			9,980			24,169			32,701			8,927			50			1,041

Total operating expenses		209,981			191,810			268,038			209,981			195,939			272,167			86,129			24,959			83,190

Operating income (loss)		29,412			15,208			40,607			29,412			1,482			26,134			6,643			668			14,446

Non-operating income (expense):
Other income		19			11			11			19			11			11			24			28			55
Interest expense		(37,690	)		(36,639	)		(49,432	)		(37,690	)		(32,546	)		(45,339	)		(4,342	)		(210	)		(1,054	)
Net foreign currency exchange gain (loss)		(86	)		(157	)		(707	)		(86	)		(157	)		(707	)		(37	)		(183	)		32

Income (loss) before income taxes		(8,345	)		(21,577	)		(9,521	)		(8,345	)		(31,210	)		(19,901	)		2,288			303			13,479

Income tax benefit (expense)		2,623			7,992			3,962			2,623			9,312			5,543			(2,399	)		1,491			(6,694	)

Net income (loss)	$	(5,722	)	$	(13,585	)	$	(5,559	)	$	(5,722	)	$	(21,898	)	$	(14,358	)	$	(111	)	$	1,794		$	6,785

Earnings (loss) per share:
Basic	$	(2,413)		$	(5,611)		$	(2,292	)	$	(2,413	)	$	(9,267	)	$	(6,027	)	$	(62	)

Diluted	$	(2,413)		$	(5,611)		$	(2,292	)	$	(2,413	)	$	(9,267	)	$	(6,027	)	$	(62	)

(A)

Reflects unaudited pro forma summary financial information giving effect to the sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus and the use of the net proceeds from this offering to repay $ of Optiv’s outstanding indebtedness as if such transactions had occurred at January 1, 2015.

(B)	Reflects unaudited pro forma summary financial information giving effect to the FishNet Security Merger and the other transactions as described under “Unaudited Pro Forma Consolidated Financial Information” as if such transactions had occurred at January 1, 2015.

(C)	Reflects summary historical financial data for Accuvant for periods following the Accuvant/Blackstone Transaction, and results of operations of FishNet Security are included from January 28, 2015.

(D)	Reflects summary financial data for Accuvant for periods following the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.

(E)	Reflects summary financial data for Accuvant for periods prior to the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.


	Pro Forma									Historical Information
										Successor												Predecessor
(Dollars in thousands, except per share data)	Nine Months Ended September 30, 2016^(A)			Nine Months Ended September 30, 2015^(A)^(B)			Year Ended December 31, 2015^(A)^(B)			Nine Months Ended September 30, 2016			Nine Months Ended September 30, 2015^(C)			Year Ended December 31, 2015^(C)			Period from April 22 to December 31, 2014^(D)			Period from January 1, 2014 to April 21, 2014^(E)			Year Ended December 31, 2013^(E)
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Summary Statements of Cash Flows:
Net cash provided by (used in) operating activities										$	33,035		$	(38,731	)	$	(35,680	)	$	17,283		$	7,607		$	3,396
Net cash used in investing activities											(43,591	)		(271,739	)		(274,622	)		(2,002	)		(726	)		(3,204	)
Net cash provided by (used in) financing activities											20,958			297,776			290,300			2,042			(177	)		270
Effect of exchange rate changes on cash and cash equivalents											(96	)		220			434			(55	)		171			(60	)

Change in cash and cash equivalents										$	10,306		$	(12,474	)	$	(19,568	)	$	17,268		$	6,875		$	402

Other Financial and Operational Data:⁽¹⁾
Financial
Period-on-period revenue growth (%)⁽²⁾		(4	%)					24	%
Gross margin		37	%		31	%		32	%		37	%		30	%		31	%		29	%		31	%		29	%
EBITDA⁽³⁾	$	50,557		$	40,589		$	72,436		$	50,557		$	25,532		$	56,633		$	14,329		$	1,576		$	18,099
Adjusted EBITDA⁽³⁾	$	61,178		$	55,028		$	96,385		$	61,178		$	56,062		$	97,478		$	26,298		$	2,088		$	19,443

Operational
Total number of clients⁽⁴⁾		4,282			4,365			5,000			4,282			4,260			4,917			2,051			1,161			2,241


	Pro Forma	Historical Information
		Successor									Predecessor
(In thousands)	As of September 30, 2016	As of September 30, 2016			As of December 31, 2015			As of December 31, 2014			As of December 31, 2013
	(Unaudited)	(Unaudited)
Summary Balance Sheet Data:
Cash and cash equivalents		$	15,315		$	5,009		$	24,577		$	434
Working capital⁽⁵⁾			28,031			33,299			31,763			(8,361	)
Total assets⁽⁶⁾			1,019,857			1,155,734			455,419			201,443
Total debt⁽⁷⁾			633,181			612,387			76,211			25,056
Total liabilities			1,054,978			1,188,263			300,644			167,456
Temporary equity			2,560			555			16,539			—
Total stockholders’ equity (deficit)			(37,681	)		(33,084	)		138,236			33,987
Retained earnings (deficit)			(40,188	)		(34,466	)		(111	)		8,939

(A)

(B)	Reflects unaudited pro forma summary financial information giving effect to the FishNet Security Merger and the other transactions as described under “Unaudited Pro Forma Consolidated Financial Information” as if such transactions had occurred at January 1, 2015.

(C)	Reflects summary historical financial data for Optiv for periods following the Accuvant/Blackstone Transaction, and results of operations of FishNet Security are included from January 28, 2015.

(D)	Reflects summary financial data for Optiv for periods following the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.

(E)	Reflects summary financial data for Accuvant for periods prior to the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.

(1)

We regularly monitor a number of financial and operating metrics in order to measure our current performance and estimate our future performance. For a description of how we calculate these financial and operating metrics as well as their uses, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics” included elsewhere in this prospectus.

(2)

Reflects revenue growth in the period divided by the total revenue in the comparable prior year period, presented as a percentage. Period-on-period revenue growth for 2015 and for the nine months ended September 30, 2016 on a pro forma basis is compared to revenue for 2014 and the nine months ended September 30, 2015, respectively, on a pro forma basis, which is calculated as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Optiv Comparison of Historical Year Ended December 31, 2015, the Period from April 22, 2014 to December 31, 2014 and the Period from January 1, 2014 to April 21, 2014 and Optiv Comparison of Pro Forma Year Ended December 31, 2015 (unaudited) and Pro Forma Year Ended December 31, 2014 (unaudited).”

(3)

We define EBITDA as net income (loss) adjusted for interest, tax, depreciation and amortization of acquired intangibles. We evaluate our operating performance using a metric we refer to as “Adjusted EBITDA” which is defined as EBITDA adjusted to exclude net foreign currency exchange gains (losses); equity based compensation; transaction expenses; enterprise resource planning system (“ERP”) expenses; integration expenses; and certain other adjustments. In addition, we use a metric we refer to as “Further Adjusted EBITDA,” which we define as Adjusted EBITDA as further adjusted to exclude monitoring, support and service fees to our Sponsors and board of directors fees, in the calculation of certain bonus and incentive payments to management. Furthermore, we use a metric we refer to as “Covenant Adjusted EBITDA,” which we define as Further Adjusted EBITDA as additionally adjusted to add deferred revenue, synergies and pro forma EBITDA for entities that we have acquired, to evaluate flexibility under certain restrictive covenants. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” on pages 92 through 94 for more information.

EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA are not terms recognized under U.S. Generally Accepted Accounting Principles (“GAAP”) and should not be considered as substitutes for other measures of financial performance reported in accordance with GAAP. In addition, our definitions of EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) EBITDA and Adjusted EBITDA are among the measures used by our management team to evaluate our financial and operating performance and make day-to-day financial and operating decisions; and (ii) EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties as common performance measures to compare results or estimate valuations across companies in our industry. We believe the exclusion of non-cash expenses in the calculation of Adjusted EBITDA is useful to both management in its evaluation of our business and to securities analysts and investors seeking to evaluate our financial and operating performance because non-cash expenses are not indicative of our ongoing operations and would make it more difficult for securities analysts and investors to evaluate period-over-period performance of our core operations.

We believe that Further Adjusted EBITDA provides useful information to investors about our performance and management compensation because certain bonus and incentive payments to management are calculated on the basis of Further Adjusted EBITDA, as described in additional detail under “Executive and Director Compensation.”

We believe that Covenant Adjusted EBITDA provides useful information to investors about our liquidity because under the agreements governing our senior secured first lien term loan facility, senior secured second lien term loan facility and ABL facility (each as defined under “Description of Certain Indebtedness”), our ability to engage in certain activities, such as incurring additional indebtedness, is tied to ratios based on Covenant Adjusted EBITDA (which is defined as “Consolidated EBITDA” in such agreements) as described in additional detail on page 92.

EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA have limitations as analytical tools, and you should not consider such measures either in isolation or as a substitute for net income (loss) or other methods of analyzing our results as reported under GAAP. Some of the limitations are:

•

EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs or contractual commitments;

•

EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA do not reflect our interest expense, or the cash requirements to service interest or principal payments, on our indebtedness;

•

EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;

•

EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA do not reflect the impact on earnings or changes resulting from matters that we consider not to be indicative of our future operations;

•

although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often need to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and

•

other companies may calculate EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA differently, limiting their usefulness as comparative measures.

Because of these limitations, EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.

The following table provides a reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA:


	Pro Forma									Historical Information
										Successor												Predecessor
(In thousands)	Nine Months Ended September 30, 2016^(A)			Nine Months Ended September 30, 2015^(A)^(B)			Year Ended December 31, 2015^(A)^(B)			Nine Months Ended September 30, 2016			Nine Months Ended September 30, 2015^(C)			Year Ended December 31, 2015^(C)			Period from April 22 to December 31, 2014^(D)			Period from January 1, 2014 to April 21, 2014^(E)			Year Ended December 31, 2013^(E)
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net income (loss)	$	(5,722	)	$	(13,585	)	$	(5,559	)	$	(5,722	)	$	(21,898	)	$	(14,358	)	$	(111	)	$	1,794		$	6,785
Add (subtract):
Interest expense		37,690			36,639			49,432			37,690			32,546			45,339			4,342			210			1,054
Provision for income tax expense (benefit)		(2,623	)		(7,992	)		(3,962	)		(2,623	)		(9,312	)		(5,543	)		2,399			(1,491	)		6,694
Depreciation and amortization		21,212			25,527			32,525			21,212			24,196			31,195			7,699			1,063			3,566

EBITDA		50,557			40,589			72,436			50,557			25,532			56,633			14,329			1,576			18,099

Adjustments:
Net foreign currency exchange (gain) loss		86			157			707			86			157			707			37			183			(32	)
Equity-based compensation^(F)		1,956			1,276			2,145			1,956			1,276			2,145			467			—			167
Transaction expenses^(G)		1,558			—			—			1,558			16,091			16,889			10,675			—			—
ERP implementation expenses^(H)		144			5,191			5,201			144			5,191			5,201			—			—			—
Integration expenses^(I)		6,633			7,018			12,668			6,633			7,018			12,668			—			—			—
Non-capitalizable IPO costs^(J)		244			209			2,583			244			209			2,583			—			—			—
Other^(K)		—			588			645			—			588			652			790			329			1,209

Total adjustments		10,621			14,439			23,949			10,621			30,530			40,845			11,969			512			1,344

Adjusted EBITDA	$	61,178		$	55,028		$	96,385		$	61,178		$	56,062		$	97,478		$	26,298		$	2,088		$	19,443

(A)

(B)	Reflects unaudited pro forma financial and other information after giving effect to the FishNet Security Merger and the other transactions as described under “Unaudited Pro Forma Consolidated Financial Information” as if such transactions had occurred as of January 1, 2015.

(C)	Reflects historical financial and other data for Optiv for periods following the Accuvant/Blackstone Transaction, and results of operations of FishNet Security are included from January 28, 2015.

(D)	Reflects financial and other data for Optiv for periods following the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.

(E)	Reflects financial and other data for Accuvant for periods prior to the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.

(F)

Reflects non-cash stock-based compensation expense under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 718, Compensation Stock Compensation. We believe the exclusion of stock-based compensation from Adjusted EBITDA is useful to investors that seek to compare our financial performance with that of others in the industry.

(G)

Reflects the transaction expenses paid in connection with the Accuvant/Blackstone Transaction, the FishNet Security Merger and other acquisitions. We believe the exclusion of transaction expenses from Adjusted EBITDA is useful to investors as this adjustment represents discrete items relating to a specific event that occurred, which is not indicative of our ongoing core operations.

(H)

Reflects costs related to the implementation of the ERP system. We believe the exclusion of implementation of ERP system costs from Adjusted EBITDA is useful to investors as this adjustment represents a specific event related to the FishNet Security Merger, which is not indicative of our ongoing core operations.

(I)	Reflects rebranding and integration costs paid to third-party consultants as a result of the FishNet Security Merger. We believe the exclusion of rebranding and integration costs from Adjusted EBITDA is useful to investors as we do not believe that it represents our core business.

(J)	Reflects costs related to IPO readiness activities. We believe the exclusion of costs related to IPO readiness activities from Adjusted EBITDA is useful to investors as this adjustment represents a one-time event that is not indicative of our ongoing core operations.

(K)	Other adjustments include amounts our management believes are not indicative of our ongoing operations for various reasons, including, among others, restructuring costs and severance costs.

(4)	Represents the total number of separate clients we transacted with during the period.

(5)	We define working capital as total current assets less total current liabilities.

(6)	Net of accounts receivable and sales return allowances of $9.6 million, $3.0 million, $2.3 million and $1.4 million as of September 30, 2016, December 31, 2015, December 31, 2014 and December 31, 2013, respectively.

(7)	Net of deferred financing costs of $18.6 million, $20.5 million and $3.7 million as of September 30, 2016, December 31, 2015 and December 31, 2014, respectively.

RISK FACTORS

An investment in shares of our common stock involves risks. You should carefully consider the following information about these risks, together with the other information contained in this prospectus, before investing in shares of our common stock.

Risks Related to Our Business and Industry

Our results of operations may fluctuate, in part, because of the resource-intensive nature of our client engagement efforts, the length and variability of our client engagement cycle and the short-term difficulty in adjusting our operating expenses. The length of our client engagement cycle, from proof of concept to delivery of and payment for products and services, is typically several months but can be more than a year. To the extent our competitors offer products and services that our prospective clients view as equivalent to those we offer, our average client engagement cycle may increase. Because the length of time required to close a transaction varies substantially from client to client, it is difficult to predict exactly when, or even if, we will complete a transaction with a potential client. As a result, large individual transactions have, in some cases, occurred in quarters subsequent to those we anticipated, or have not occurred at all. Furthermore, even if we close a transaction during a given quarter, we may be unable to recognize the revenue derived from such transaction during the same period due to our revenue recognition policies. Revenue for our consulting services is recognized as the work is performed. Revenue for the sale of third-party products or services is recognized when the client takes title to the product or has access to the services. The loss or delay of one or more large transactions in a quarter could impact our results of operations for that quarter and any future quarters. As a result of these factors, it is difficult for us to forecast our revenue accurately in any quarter. Because a substantial portion of our expenses are relatively fixed in the short term, our results of operations will suffer if our revenue falls below our or analysts’ expectations in a particular quarter, which could cause the price of our common stock to decline.

If we are unable to sell additional cyber security solutions to, or renew our agreements with, our existing clients, our future revenue and operating results will be harmed.

Our future success depends, in part, on our ability to expand the deployment of our platform with existing clients by selling them additional cyber security solutions. This may require increasingly sophisticated and costly client engagement efforts and may not result in additional sales. In addition, the rate at which our clients purchase additional products, subscriptions and services depends on a number of factors, including the perceived need for additional cyber security as well as general economic conditions. If our efforts to sell additional products, subscriptions and services to our existing clients are not successful, our business may suffer.

Further, our existing clients typically have no contractual obligation to renew their contracts with us after the initial contract period, and we may not be able to accurately predict renewal rates. Our clients’ renewal rates may decline or fluctuate as a result of a number of factors, including the level of their satisfaction with our platform, our client support, client IT budgets and the pricing of our platform compared with the products and services offered by our competitors. If our clients renew their subscriptions, they may renew for shorter contract lengths or on other terms that are less beneficial to us. We cannot assure you that our clients will renew their agreements with us, and if our clients do not renew their agreements or renew on less favorable terms, our revenue may grow more slowly than expected, if at all.

If we are unable to attract new clients, our future revenue and operating results will be harmed.

Our success depends, in part, on our ability to attract new clients. The number of clients that we add in a given period impacts both our short-term and long-term revenue. If we are unable to attract a sufficient number

of new clients, we may be unable to generate revenue at desired rates. The cyber security market is competitive and many of our competitors have substantial financial, personnel and other resources that they utilize to develop products and attract clients. As a result, it may be difficult for us to add new clients to our client base. Competition in the marketplace may also lead us to win fewer new clients or result in our providing discounts and other commercial incentives. Additional factors that impact our ability to attract new clients include the perceived need for cyber security, the size of our prospective clients’ IT budgets, the utility and efficacy of our offerings, whether proven or perceived, and general economic conditions. These factors may have a meaningful negative impact on future revenue and operating results.

If we fail to meet our service level obligations under our service level agreements, we may be subject to certain penalties and could lose clients.

We have service level agreements with many of our managed services clients under which we guarantee specified levels of service availability. These arrangements require us to estimate the level of service we will provide. If we fail to meet our service level obligations under these agreements, we may be subject to penalties, which could result in higher than expected costs, and we may lose clients, which could lead to decreased revenue and decreased gross and operating margins. If we fail to meet our service level obligations under these agreements, our reputation may suffer as a result.

Although our clients are ultimately responsible for the security of their own systems, our clients rely on our cyber security solutions to secure their data, which may include financial records, credit card information, business information, source code, trade secrets and other IP, client information, health information, other personally identifiable information or other sensitive personal information. We will not succeed unless the marketplace is confident that we provide effective cyber security protection. We provide privileged account security products and services, including, in some cases, having privileged network connections into our clients’ networks, and therefore we may be a more attractive target for attacks by cyber attackers or other data thieves. A breach of our network security and systems or other events that cause the loss or public disclosure of, or access by third parties to, our or our clients’ stored files, networks, systems or data could have serious negative consequences for our business, including possible fines, penalties and damages, reduced demand for our solutions, an unwillingness of our clients to use our solutions, harm to our brand and reputation and time-consuming and expensive litigation. As a well-known provider of cyber security solutions, we could be targeted by attacks specifically designed to interrupt our business or harm our reputation. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, often are not recognized until launched against a target, are designed to avoid detection and remain hidden, and may originate from less regulated or remote areas around the world. As a result, we may be unable to prevent these techniques, detect and contain a compromise of our systems and networks in a timely manner, implement adequate measures, or enforce the laws and regulations that govern such activities. Furthermore, many of our employees have training and skills relating to cyber security and specialized knowledge regarding our systems, which could enable an employee or former employee to intentionally compromise our information systems. Furthermore, cyber attackers may launch attacks intended solely to disrupt our business, commonly known as denial of service attacks. Such attacks could impair our ability to operate our business, including our ability to provide maintenance and support services to our clients.

Breaches or denial of service attacks experienced by our clients could result in litigation and other liability to us and could damage our brand.

Even if our clients implement all of our recommendations, they may still be the subject of successful security breaches or denial of service attacks or similar events. Breaches or other attacks of our clients’ systems

could result in litigation and other liability to us or could create adverse publicity and cause a loss of client confidence in our business, which could damage our brand or otherwise adversely affect our business.

Our recent combination of Accuvant and FishNet Security creates integration challenges for our business, which could cause our business to suffer.

Our recent integration and combination of the respective operations, management, personnel and technology of Accuvant and FishNet Security could result in interruptions in our business activities, a deterioration in our employee and client relationships, increased costs and harm to our reputation with consumers, all of which could have a material adverse effect on our business. We may also experience difficulties in combining corporate cultures, maintaining employee morale and retaining key employees. In addition, the integration of our businesses has imposed substantial demands on our management. We have incurred, and expect that we will continue to incur, significant costs associated with integrating the operations of Accuvant and FishNet Security. We cannot assure you that the benefits of consolidation will be achieved as a result of the FishNet Security Merger or that our businesses will be successfully integrated in a timely manner.

In connection with the integration of Accuvant and FishNet Security, we implemented new business controls, processes and systems. Because we have only recently begun to use these systems, we cannot fully anticipate how these systems will continue to perform in the future, and these systems may not be as reliable as our legacy systems, which may interrupt and interfere with our business. We may not have anticipated all future needs, and these systems may need to be upgraded or modified to meet such needs, which may adversely affect our results of operations.

In addition, we may not be able to achieve the synergies of the FishNet Security Merger that we anticipate as quickly as we currently expect, or at all. To the extent we fail to achieve these synergies, our results of operations may be impacted, and any such impact may be material.

We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition and results of operations.

The market for cyber security products and services is intensely competitive and characterized by rapid changes in technology, client requirements, industry standards and frequent new product introductions and improvements. We anticipate continued challenges from current competitors as well as by new entrants into the industry. If we are unable to anticipate or effectively react to these competitive challenges, our competitive position could weaken, and we could experience a decline in our growth rate or revenue that could adversely affect our business and results of operations.

Our competitors and potential competitors include large organizations that provide cyber security solutions as well as smaller regional security providers. Some of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as:

•

greater name recognition, longer operating histories and larger client bases;

•

larger sales and marketing budgets and resources;

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broader distribution and established relationships with vendor partners and clients;

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greater client support resources;

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greater resources to make acquisitions;

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lower labor and research and development costs;

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larger and more mature IP portfolios; and

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substantially greater financial, technical and other resources.

In addition, some of our competitors may be able to leverage their relationships with vendor partners and clients based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from using our cyber security solutions. Potential clients may also prefer to purchase from their existing suppliers rather than a new supplier regardless of product performance or features. As a result, even if our features are superior, clients may not purchase from us. In addition, our current and potential competitors may establish cooperative relationships among themselves or with third parties that may further enhance their resources. If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, financial condition and results of operations could be adversely affected.

We could experience material changes to the agreements with our vendor partners, including changes to purchase discounts and rebate programs, if certain technology manufacturers consolidate.

Any consolidation among our suppliers could increase their market power, which could increase our product costs and negatively affect our ability to renew our existing agreements with our vendor partners on similar terms, if at all. Any such consolidation could increase our product costs and reduce our gross profit margins.

If we are unable to increase client engagements with large organizations while mitigating the risks associated with serving such clients, our business, financial position and results of operations may suffer.

Our growth strategy is dependent, in part, upon increasing sales to large organizations. Sales to large clients involve risks that may not be present (or that are present to a lesser extent) with sales to smaller entities. These risks include:

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increased purchasing power and leverage held by large clients in negotiating contractual arrangements with us;

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more stringent or costly requirements imposed upon us in our support service contracts with such clients, including stricter support response times and penalties for any failure to meet support requirements;

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more complicated implementation processes;

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longer client engagement cycles and the associated risk that substantial time and resources may be spent on a potential client that ultimately elects not to purchase our products or services or purchases less than we expected; and

•

increased pressure for discounts and write-offs.

In addition, because security breaches with respect to larger organizations, particularly those with higher public profiles, are likely to be heavily publicized, there is increased reputational risk associated with serving such clients.

Our global account managers drive a significant percentage of our operating results. We could experience longer client engagement cycles and productivity decreases if we were required to transition their accounts to different account managers.

On a pro forma basis, the top 5% of our global account managers produced approximately 27% of our gross profit in 2015. We believe that our growth will depend, to a significant extent, on our success in retaining top account managers and the ability of our top account managers to obtain new clients, manage our existing client base and help us to introduce new products and solutions. If we were required to transition their accounts to different account managers, such replacement account managers may be less productive and our revenue and the growth of our business may be harmed or we may lose clients who have developed relationships with such account managers. Additionally, if our efforts do not result in increased revenue, our operating results could be negatively impacted due to the upfront operating expenses associated with transitioning existing accounts to different account managers.

Our top vendor partners represent a significant percentage of our cyber security solutions.

We purchase products, directly and indirectly, for resale from our vendor partners, which include original equipment manufacturers and software publishers. In 2015, on a pro forma basis, we purchased approximately 54% of the technology we sold from our top 20 vendor partners. We purchase and resell such technology pursuant to reseller agreements with varying terms and conditions, including sales channel restrictions, purchase discounts and vendor partner programs and funding (including purchase rebates and sales volume rebates) and product patent indemnification. However, we do not typically enter into long-term contracts with our vendor partners and most of our reseller agreements are terminable upon 30 days’ notice by either party. A reduction in vendor partner programs or funding or our failure to timely react to changes in vendor partner programs or funding could have an adverse effect on our business, results of operations or cash flows.

From time to time, our vendor partners may terminate or limit our right to sell some or all of their products or change the terms and conditions or reduce or discontinue the incentives that they offer us. For example, there is no assurance that, as our vendor partners continue to sell directly to end users and through resellers, they will not limit or curtail the availability of their products to resellers like us. Any such termination or limitation or the implementation of such changes could have a negative impact on our business, results of operations or cash flows.

The investments we make to support our growth may not achieve the benefits we expect or such benefits may be delayed, which could harm our operating results. Furthermore, if we do not effectively manage any future growth, or are unable to improve our systems and processes, our operating results will be adversely affected.

We continue to increase the breadth and scope of our offerings and, correspondingly, the breadth and scope of our operations. To support this growth, and to manage any future growth effectively, we must continue to improve and expand our IT and financial infrastructure, our operating and administrative systems and our ability to manage headcount, capital and processes in an efficient manner. In the future, we may incur expenses if we invest in international operations and infrastructure. We would likely recognize the costs associated with any such investments earlier than the anticipated benefits, and the return, if any, on such investments may be lower, or may develop more slowly, than we expect. If we do not achieve the benefits anticipated from these investments, or if the achievement of these benefits is delayed, our operating results may be adversely affected.

If we fail to effectively manage our growth, our business, financial condition and results of operations could be harmed.

On a pro forma basis, our revenue for the year ended December 31, 2015 increased 24% from the year ended December 31, 2014. This rapid growth has placed significant demands on our management and our operational and financial infrastructure. We cannot assure you that we will be able to successfully scale improvements to our systems and processes in a manner that keeps pace with our growth or that such systems will be effective in preventing or detecting errors, omissions or fraud. Our continuing growth will require significant capital expenditures and the allocation of valuable management and employee resources. If we fail to manage our growth effectively, operating results may be adversely affected.

If we do not effectively expand and train our client engagement team, we may be unable to add new clients or increase engagements with our existing clients, and our business will be adversely affected.

We continue to be substantially dependent on our client engagement team to obtain new clients and increase engagements with existing clients. There is significant competition for client engagement personnel with the skills and technical knowledge that we require. Our ability to achieve significant revenue growth will depend, in large part, on our success in recruiting, training and retaining sufficient numbers of client engagement personnel to support our growth, particularly in international markets. New hires require significant training and may take significant time before they achieve full productivity. Our recent and future hires may not become productive as

quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. In addition, because we continue to grow rapidly, a large percentage of our client engagement team is new to our company. If we are unable to hire and train a sufficient number of effective client engagement personnel, or the personnel we hire are not successful in obtaining new clients or increasing our engagements with our existing clients, our business will be adversely affected.

The competition for qualified and experienced cyber security professionals is intense. If we are unable to hire additional cyber security professionals and retain existing cyber security professionals, our business will be adversely affected.

Our performance is dependent on the efforts of our cyber security professionals. The competition for qualified and experienced cyber security personnel has been and continues to be fierce. Our ability to compete effectively and expand our business depends on our ability to attract new cyber security professionals and to retain and motivate our existing cyber security professionals. If we are unable to attract and retain new talent, the implementation of our business model and the development and introduction of new services could be hindered or delayed, which would negatively affect our results of operations. Also, to the extent we hire professionals from competitors, we may be subject to allegations that they have been improperly solicited, or that they have divulged proprietary or other confidential information, or that their former employers own their inventions or other work product.

We rely on our management team and other key employees and will need additional personnel to grow our business, and the loss of one or more key employees or our inability to attract and retain qualified personnel, including members for our board of directors, could harm our business.

Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel and the continued services of our senior management and other key personnel to execute on our business plan and to identify and pursue new opportunities and solution innovations. The loss of the services of our senior management or any of our key personnel, the inability to attract or retain qualified personnel, or delays in hiring required personnel, particularly in client engagement, could significantly delay or prevent the achievement of our development and strategic objectives, and may adversely affect our business, financial condition and operating results. Our productivity and the quality of our solutions may be adversely affected if we do not integrate and train our new employees quickly and effectively. Furthermore, if we are not effective in retaining our key personnel, our business could be adversely impacted and our operating results and financial condition could be harmed.

The cyber security market is rapidly evolving within the increasingly challenging cyber threat landscape. If the industry does not continue to develop as we anticipate, our revenue will not grow as quickly as expected, if at all, and our share price could decline. If we do not accurately predict, prepare for and respond promptly to the rapidly evolving technological and market developments and changing client needs in the cyber security market, our competitive position and prospects will be harmed.

Many of our clients operate in markets characterized by rapidly changing technologies and business plans, which require them to add numerous network access points and adapt to increasingly complex IT networks, incorporating a variety of hardware, software applications, operating systems and networking protocols. As their technologies and business plans grow more complex, we expect these clients to face new and increasingly sophisticated methods of attack. We face significant challenges in ensuring that our platform effectively identifies and responds to these advanced and evolving attacks without disrupting our clients’ network performance. As a result of the continued rapid innovations in the technology industry, including the rapid growth of smart phones, tablets and other devices and the trend of “bring your own device” in enterprises, we expect the networks of our clients to continue to change rapidly and become more complex.

If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below the expectations of securities analysts and investors, resulting in a decline in our stock price.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as described in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in our stock price. Significant assumptions and estimates used in preparing our consolidated financial statements include those related to assets, liabilities, revenue, expenses and related disclosures.

Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations.

We prepare our consolidated financial statements in conformity with GAAP. These principles are subject to interpretation by the Securities and Exchange Commission and various bodies formed to interpret and create appropriate accounting principles and guidance. Changes in financial accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our business and financial results. In particular, in May 2014, the Financing Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 will significantly change GAAP revenue recognition guidance and is scheduled to become effective for public companies’ annual reporting periods beginning after December 15, 2017, with early adoption permitted as of January 1, 2017.

We are in the process of evaluating the impact of ASU 2014-09 on our consolidated financial statements. As a result, the effects of the new standard are currently unknown. Accordingly, adoption and implementation of ASU 2014-09 could have a significant impact on our financial statements. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Accounting Pronouncements” for additional information.

We may be required to write down goodwill or identifiable intangible assets.

Under GAAP, if we determine goodwill or identifiable intangible assets are impaired, we will be required to write down these assets and record a non-cash impairment charge. As of September 30, 2016, we had goodwill of $426.4 million and other acquired intangible assets, net of accumulated amortization, of $181.7 million. Intangible assets, net consists primarily of the estimated value assigned to certain customer related assets and trade names.

Determining whether an impairment exists and the amount of the potential impairment involves quantitative data and qualitative criteria that are based on estimates and assumptions requiring significant management judgment. Future events or new information may change management’s valuation of an intangible asset in a short amount of time. The timing and amount of impairment charges recorded in our consolidated statements of operations and other comprehensive income and write-downs recorded in our consolidated balance sheets could vary if management’s conclusions change. Any impairment of goodwill or intangible assets could have a material adverse effect on our financial condition and results of operations.

International expansion has certain inherent challenges including currency fluctuation, cultural differences and language barriers. Our management team does not have significant experience expanding into international markets.

We may expand our business into markets outside of North America. Any future global operations may be subject to a number of risks, including the following:

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greater difficulty in enforcing contracts and managing collections, as well as longer collection periods;

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fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business;

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management communication and integration problems resulting from cultural and geographic dispersion;

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risks associated with existing or future export controls, trade restrictions and other domestic and foreign legal requirements, including any importation, certification and localization of our platform that may be required in foreign countries;

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greater risk of unexpected changes in regulatory practices, tariffs and tax laws and treaties;

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compliance with anti-bribery laws, including, without limitation, compliance with the U.S. Foreign Corrupt Practices Act and the UK Anti-Bribery Act;

•

heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;

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reduced or uncertain protection of IP rights in some countries;

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social, economic and political instability, terrorist attacks and security concerns in general; and

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potentially adverse tax consequences.

These and other factors could harm our ability to generate revenue and subject us to potential fines and losses and, consequently, materially impact our business, results of operations and financial condition.

If we do not accurately anticipate the cost, risk and complexity of performing our work, our contracts could be less profitable than expected or unprofitable.

It is important for us to accurately estimate and control our contract costs so that we can maintain positive operating margins and profitability. As described elsewhere in this prospectus, we generally enter into two principal types of contracts with our clients for our consulting services: fixed-price contracts and time-and-materials contracts. If we fail to accurately estimate our costs when negotiating a contract with a client, particularly a fixed-price contract, we may fail to achieve our expected margins, which could materially impact our business, results of operations and financial condition.

Future acquisitions and investments could require significant management attention, disrupt our business, harm our financial condition, dilute stockholder value and adversely affect our business and operating results.

As part of our business strategy and in order to remain competitive, we may acquire or make investments in complementary companies, products or technologies. We may not be able to find suitable acquisition candidates, and we may not be able to complete such acquisitions on favorable terms, if at all. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, and any acquisitions we complete could be viewed negatively by our clients, analysts and investors. In addition, if we are unsuccessful at integrating such acquisitions or the technologies associated with such acquisitions, our revenue and results of operations could be adversely affected. Any integration process may require significant time and

resources, and we may not be able to manage the process successfully. We may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition transaction, including accounting charges. We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could adversely affect our financial condition or the value of our common stock. The issuance of equity to finance any such acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.

We believe that our brand is integral to our success. If we fail to cost-effectively promote or protect our brand, our business and competitive position may be harmed.

We believe that cost-effectively promoting and maintaining awareness and integrity of our company and our brand are vital to achieving widespread acceptance of our existing and future solutions and are important elements in attracting new clients and retaining our existing clients, particularly if we seek to expand internationally. We believe that the importance of brand recognition will increase as competition in our market further intensifies. We recently introduced our Optiv brand following the combination of Accuvant and FishNet Security. We expect to invest substantial resources to promote and maintain the Optiv brand and generate client leads, but there is no guarantee that our brand development strategies will enhance the recognition of our brand or lead to increased revenue. In addition, there are many factors which could negatively affect the overall brand of our company. Some of our existing and potential competitors have well-established brands with equal or greater recognition than we have. If our efforts to cost-effectively promote and maintain our brand are not successful, our operating results and our ability to attract and retain clients may be adversely affected. In addition, even if our brand recognition and loyalty increases, this may not result in increased use of our solutions or higher revenue. Moreover, if we fail to generate a sufficient volume of leads from these various activities, they may not be offset by revenue and our business and operating results could be adversely affected.

In addition, independent industry analysts often provide reviews of our solutions, as well as those of our competitors, and perception of our solutions in the marketplace may be significantly influenced by these reviews. We have no control over what these industry analysts report, and because industry analysts may influence current and potential clients, our brand could be harmed if they do not provide a positive review of our solutions or view us as a market leader.

Our failure to raise additional capital or generate the significant capital necessary to expand our operations and execute on our business plan could reduce our ability to compete and could harm our business.

We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new products and enhancements to our platform, improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests and the per share value of our common stock could decline. Furthermore, if we engage in debt financing, the holders of debt would have priority over the holders of common stock, and we may be required to accept terms that restrict our ability to incur additional indebtedness. We may also be required to take other actions that would be in the interests of the debt holders and force us to maintain specified liquidity or other ratios, any of which could harm our business, results of operations and financial condition. If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things:

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develop or enhance our cyber security solutions;

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continue to expand our client engagement and marketing and research and development organizations;

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acquire complementary businesses;

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expand operations, in the United States or internationally;

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hire, train and retain employees; or

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respond to competitive pressures or unanticipated working capital requirements.

Our failure to do any of these things could harm our business, financial condition and results of operations.

Our business is subject to the risks of tornadoes, fire, power outages, floods and other catastrophic events, and to interruption by man-made problems such as terrorism.

A significant natural disaster, such as a tornado, a fire, a flood, or significant power outage could have a material adverse impact on our business, results of operations and financial condition. Our corporate headquarters are located in Denver, Colorado, and we maintain significant offices in Overland Park, Kansas and Elkridge, Maryland. In addition, natural disasters could affect our supply chain, manufacturing vendors or logistics providers’ ability to provide materials and perform services such as manufacturing products or assisting with shipments on a timely basis. In the event that our or our service providers’ IT systems or manufacturing or logistics abilities are hindered by any of the events discussed above, shipments could be delayed, resulting in missed financial targets, such as revenue and shipment targets, for a particular quarter. In addition, acts of terrorism and other geo-political unrest could cause disruptions in our business or the business of our supply chain, manufacturers, logistics providers, vendor partners, or clients or the economy as a whole. Any disruption in the business of our supply chain, manufacturers, logistics providers, vendor partners or clients that impacts client engagements, particularly at the end of a fiscal quarter, could have a significant adverse impact on our financial results. All of the aforementioned risks may be further increased if the disaster recovery plans for us or our suppliers prove to be inadequate. To the extent that any of the above results in delays or cancellations of client orders, or the delay in the manufacture, deployment or shipment of our products, our business, financial condition and results of operations would be adversely affected.

Reliance on shipments at the end of the quarter could cause our revenue for the applicable period to fall below expected levels. Our profit margins depend, in part, on the volume of products and services sold, and we may be unable to achieve increases in our profit margins in the future.

As a result of client buying patterns and the efforts of our client engagement team to meet or exceed their performance objectives, we have historically generated a substantial portion of revenue during the last few weeks of each quarter. A significant interruption in our IT systems, which manage critical functions such as order processing, revenue recognition, financial forecasts, inventory and supply chain management and trade compliance reviews, could result in delayed order fulfillment and decreased revenue for that quarter. If expected revenue at the end of any quarter is delayed for any reason, including the failure of anticipated purchase orders to materialize, inability to ship and demonstrate clients’ receipt of products prior to quarter-end to fulfill purchase orders received near the end of the quarter, our failure to manage inventory to meet demand, our inability to release new products on schedule, any failure of our systems related to order review and processing, or any delays in shipments based on trade compliance requirements, our revenue for that quarter could fall below our expectations and the estimates of market analysts, which could adversely impact our business and results of operations and cause a decline in the trading price of our common stock.

Seasonality may cause fluctuations in our revenue.

We believe there are significant seasonal factors that cause us to record higher revenue in some quarters compared to others. We believe this variability is largely due to our clients’ budgetary and spending patterns. For example, we have historically generated a higher portion of our sales in the final quarter of each fiscal year, at which point our cost of sales increases relative to any increase in revenue, and we pay vendors for costs incurred in the final fiscal quarter in the subsequent quarters (i.e., first half of the following fiscal year). Our growth rate may have made seasonal fluctuations more difficult to detect. If our growth rate slows over time, seasonal or cyclical variations in our operations may become more pronounced, and our business, results of operations and financial position may be adversely affected.

Our results of operations could be adversely affected by volatile, negative or uncertain economic conditions and the effects of these conditions on our clients’ businesses and levels of business activity.

Global macroeconomic conditions affect our clients’ businesses and the markets they serve. Volatile, negative or uncertain economic conditions in our significant markets have undermined and could in the future undermine business confidence in our significant markets or in other markets, which are increasingly interdependent, and cause our clients to reduce or defer their spending on new initiatives and technologies, or may result in clients reducing, delaying or eliminating spending under existing contracts with us, which would negatively affect our business. Growth in the markets we serve could be at a slow rate, or could stagnate or contract, in each case, for an extended period of time. Differing economic conditions and patterns of economic growth and contraction in the geographical regions in which we operate and the industries we serve have affected and may in the future affect demand for our services. Ongoing economic volatility and uncertainty and changing demand patterns affect our business in a number of other ways, including making it more difficult to accurately forecast client demand and effectively build our revenue and resource plans, particularly in consulting.

Economic volatility and uncertainty is particularly challenging because it may take some time for the effects and changes in demand patterns resulting from these and other factors to manifest themselves in our business and results of operations. Changing demand patterns from economic volatility and uncertainty could have a significant negative impact on our results of operations.

Certain vendor partners and other ecosystem partners are expanding their service capabilities into areas that directly compete with our service offerings, which may materially change our partnership relationships and have an adverse effect on our operations. Our vendor partners and other ecosystem partners may develop features, services or other offerings that are similar to ours. Such offerings may achieve greater market acceptance, and our vendor partners and other ecosystem partners may undertake more far-reaching and successful development efforts or marketing campaigns, or may adopt more aggressive pricing policies. In addition, our vendor partners and other ecosystem partners may use information shared by our clients in order to develop services or features that compete with us. If our vendor partners or other ecosystem partners begin to directly compete with our service offerings, they may have substantial competitive advantages such as:

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greater name recognition and longer operating histories;

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larger client engagement and marketing budgets and resources;

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broader distribution and established relationships with vendor partners and clients;

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greater client support resources;

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greater resources to make acquisitions;

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lower labor and development costs;

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larger and more mature IP portfolios; and

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substantially greater financial, technical and other resources.

Intellectual property infringement or violation claims may adversely impact our results of operations.

We may be subject to claims by others that we infringe on their IP or otherwise violate their IP rights. To the extent we develop, introduce and acquire additional solutions, the risk of such claims may be increased. Any such claims, even those without merit, could require us to expend significant resources, cause us to cease making or using solutions that incorporate the challenged IP, require us to redesign, reengineer or rebrand our solutions,

divert management’s attention and resources or require us to enter into royalty or licensing agreements to obtain the right to use a third party’s IP, which may not be available to us on acceptable terms or at all. Furthermore, because of the substantial amount of discovery required in connection with IP litigation, there is a risk that some of our confidential information could be compromised by the discovery process. Any of such events may adversely impact our business, financial condition and results of operations.

Technology companies frequently enter into litigation based on allegations of patent infringement or other violations of IP rights. In addition, patent holding companies seek to monetize patents they have purchased or otherwise obtained. As we face increasing competition and gain an increasingly higher profile, the possibility of IP rights claims against us grows. From time to time, third parties have asserted, and we expect that third parties will continue to assert, claims of infringement of IP rights against us. Third parties may in the future also assert claims against our clients, who we may be obligated to indemnify against claims that our products infringe the IP rights of third parties. While we intend to increase the size of our patent portfolio, many of our competitors and others may now and in the future have significantly larger and more mature patent portfolios than we have. In addition, litigation may involve patent holding companies or other patent owners who have no relevant product offerings or revenue and against whom our own patents may provide little or no deterrence or protection.

We may be unable to protect our intellectual property adequately, which could harm our business, financial condition and results of operations.

We believe that our IP, including our trade secrets and know-how, is an essential asset of our business. We rely on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality procedures and contractual provisions, to establish and protect our IP rights in the United States and abroad. The efforts we have taken to protect our IP may not be sufficient or effective, and our trademarks, copyrights and patents may be held invalid or unenforceable. Any U.S. or other patents issued to us may not be sufficiently broad to protect our proprietary technologies, and given the costs of obtaining patent protection, we may choose not to seek patent protection for certain of our proprietary technologies. We may not be effective in policing unauthorized use of our IP, and even if we do detect violations, litigation may be necessary to enforce our IP rights. Any enforcement efforts we undertake, including litigation, could be time-consuming and expensive, could divert management’s attention and may result in a court determining that our IP rights are unenforceable. If we are not successful in cost-effectively protecting our IP rights, our business, financial condition and results of operations could be harmed.

Risks Related to Our Indebtedness

We are highly leveraged. As of September 30, 2016, the total principal amount of our debt was approximately $651.8 million. Our high degree of leverage could have detrimental consequences, including:

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requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures and pursue future business opportunities;

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increasing our vulnerability to general economic and industry conditions;

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exposing us to the risk of increased interest rates as our borrowings under our senior secured credit facilities are at variable rates of interest;

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restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

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limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; and

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limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged.

We are a holding company, and our consolidated assets are owned by, and our business is conducted through, our subsidiaries. Revenue from these subsidiaries is our primary source of funds for debt payments and operating expenses. If our subsidiaries are restricted from making distributions to us, our ability to meet our debt service obligations or otherwise fund our operations may be impaired. Moreover, there may be restrictions on payments by subsidiaries to their parent companies under applicable laws, including laws that require companies to maintain minimum amounts of capital and to make payments to stockholders only from profits. As a result, although a subsidiary of ours may have cash, we may not be able to obtain that cash to satisfy our obligation to service our outstanding debt or fund our operations.

Certain of our debt agreements impose significant operating and financial restrictions on us and our subsidiaries, which could prevent us from capitalizing on business opportunities.

The credit agreements that govern our senior secured term loan facilities and our ABL facility impose significant operating and financial restrictions on us. These restrictions limit our ability and/or the ability of our subsidiaries to, among other things:

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incur additional indebtedness and make guarantees;

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create liens on assets;

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enter into sale and leaseback transactions;

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engage in mergers or consolidations;

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sell assets;

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make fundamental changes;

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pay dividends and distributions or repurchase our capital stock;

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make investments, loans and advances, including acquisitions;

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engage in certain transactions with affiliates;

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make changes in the nature of their business; and

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make prepayments of junior debt.

As a result of these restrictions, we are limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include similar or more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders or amend the covenants.

Our failure to comply with the restrictive covenants described above as well as other terms of our other indebtedness or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms or are unable to refinance these borrowings, our results of operations and financial condition could be adversely affected.

Servicing our indebtedness will require a significant amount of cash. Our ability to generate sufficient cash depends on many factors, some of which are not within our control.

Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. To a certain extent, this is subject to general economic, financial,

competitive, legislative, regulatory and other factors that are beyond our control. If we are unable to generate sufficient cash flow to service our debt and meet our other commitments, we may need to restructure or refinance all or a portion of our debt, sell material assets or operations or raise additional debt or equity capital. We may not be able to effect any of these actions on a timely basis, on commercially reasonable terms or at all, and these actions may not be sufficient to meet our capital requirements. In addition, the terms of our existing or future debt arrangements could restrict us from effecting any of these alternatives.

Despite our current level of indebtedness, we may still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above.

We may be able to incur significant additional indebtedness in the future, and we may do so to, among other things, fund acquisitions as part of our growth strategy. Although the credit agreements that govern our senior secured term loan facilities and our ABL facility contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and we could incur substantial additional indebtedness in compliance with these restrictions. Any such additional indebtedness would increase our leverage, requiring us to devote more of our cash flow from operations to the payment of principal and interest on such indebtedness and increasing our vulnerability to general economic and industry conditions. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. Our senior secured term loan facilities includes an uncommitted incremental term facility that will allow us the option to increase the amount available under our senior secured term loan facilities by up to (1) $75.0 million plus (2) an additional amount so long as we are in pro forma compliance with a consolidated first lien net leverage ratio, in the case of our senior secured first lien term loan facility, or a consolidated total net leverage ratio, in the case of our senior secured second lien term facility, as the case may be. Availability of such incremental term facilities will be subject to, among other conditions, the absence of an event of default under our credit agreements and the receipt of commitments by existing or additional financial institutions.

Risks Related to this Offering and Ownership of our Common Stock

Our Sponsors and their respective affiliates control us and their interests may conflict with ours or yours in the future.

Immediately following this offering, our Sponsors collectively will beneficially own approximately % of our common stock (or % if the underwriters exercise their over-allotment option in full). Moreover, under our amended and restated bylaws and the stockholders’ agreement with our Sponsors that will be in effect by the completion of this offering, for so long as our Sponsors and their affiliates retain significant ownership of us, we will agree to nominate to our board individuals designated by such Sponsor, whom we refer to as the “Sponsor Directors.” Even when our Sponsors and their affiliates cease to own shares of our stock representing a majority of the total voting power, for so long as our Sponsors continue to own a significant percentage of our stock, such Sponsors will still be able to significantly influence the composition of our board of directors and the approval of actions requiring stockholder approval through their voting power. Accordingly, for such period of time, our Sponsors will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers. In particular, for so long as our Sponsors continue to own a significant percentage of our stock, such Sponsors will be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock.

Our Sponsors and their respective affiliates engage in a broad spectrum of activities. In the ordinary course of their business activities, our Sponsors and their respective affiliates may engage in activities where their interests conflict with our interests or those of our stockholders. Our amended and restated certificate of incorporation will provide that none of our Sponsors, any of their respective affiliates or any director who is not

employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Our Sponsors also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, our Sponsors may have an interest in our pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to us and our stockholders.

Upon the listing of our shares on the NYSE, we will be a “controlled company” within the meaning of the rules of the NYSE and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

After completion of this offering, our Sponsors will continue to control a majority of the combined voting power of all classes of our stock entitled to vote generally in the election of directors. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the NYSE. Under these rules, a company of which more than 50% of the voting power in the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements. For example, controlled companies, within one year of the date of the listing of their common stock:

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are not required to have a board that is composed of a majority of “independent directors,” as defined under the rules of such exchange;

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are not required to have a compensation committee that is composed entirely of independent directors; and

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are not required to have a nominating and corporate governance committee that is composed entirely of independent directors.

Following this offering, we intend to utilize these exemptions. As a result, we do not expect a majority of the directors on our board will be independent upon the closing of this offering. In addition, we do not expect that any of the committees of the board will consist entirely of independent directors upon the closing of this offering. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE.

We are an “emerging growth company” under the JOBS Act, and any decision on our part to comply with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we currently intend to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our registration statements, periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of this offering; (ii) the last day of the first fiscal year during which our annual gross revenue is $1.0 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. We cannot

predict if investors will find our common stock less attractive if we choose to rely on exemptions from certain disclosure requirements. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

In addition, as our business grows, we may cease to satisfy the conditions of an “emerging growth company.” We are currently evaluating and monitoring developments with respect to these new rules, and we cannot assure you that we will be able to take advantage of all of the benefits from the JOBS Act. In addition, as an “emerging growth company,” we may elect to delay adoption of new or revised accounting standards applicable to public companies until such standards are made applicable to private companies. We have elected to take advantage of this extended transition period, and, as a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies.

We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a public company, which could lower our profits or make it more difficult to run our business.

As a public company, we will incur significant legal, accounting and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also will incur costs associated with the Sarbanes-Oxley Act and related rules implemented by the SEC and the NYSE. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.

Our internal controls over financial reporting currently do not meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and common stock price.

Our internal controls over financial reporting currently do not meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act that eventually we will be required to meet. In addition, the recent integration of Accuvant’s and FishNet Security’s accounting systems could create additional risks for internal controls over financial reporting. Because currently we do not have comprehensive documentation of our internal controls and have not yet tested our internal controls in accordance with Section 404, we cannot conclude in accordance with Section 404 that we do not have a material weakness in our internal controls or a combination of significant deficiencies that could result in the conclusion that we have a material weakness in our internal controls. Once we are no longer an emerging growth company, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting on an annual basis. If we are not able to complete our initial assessment of our internal controls and otherwise implement the requirements of Section 404 in a timely manner or with adequate compliance, our independent registered public accounting firm may not be able to certify as to the adequacy of our internal controls over financial reporting.

Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable stock exchange listing rules, which may result in a breach of the covenants under our

financing arrangements. There also could be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements also could suffer if we or our independent registered public accounting firm were to report a material weakness in our internal controls over financial reporting. This could materially adversely affect us and lead to a decline in the price of our common stock.

If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our common stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us downgrade our common stock or publishes inaccurate or unfavorable research about our business, our common stock price may decline. If analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our common stock price or trading volume to decline and our common stock to be less liquid.

There may not be an active trading market for shares of our common stock, which may cause shares of our common stock to trade at a discount from their initial offering price and make it difficult to sell the shares of common stock you purchase.

Prior to this offering, there has not been a public trading market for shares of our common stock. It is possible that after this offering an active trading market will not develop or continue or, if developed, that any market will be sustained which would make it difficult for you to sell your shares of common stock at an attractive price or at all. The initial public offering price per share of common stock will be determined by agreement among us, the selling stockholders and the representatives of the underwriters, and may not be indicative of the price at which shares of our common stock will trade in the public market after this offering.

The market price of shares of our common stock may be volatile, which could cause the value of your investment to decline.

Even if a trading market develops, the market price of our common stock may be highly volatile and could be subject to wide fluctuations. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of shares of our common stock regardless of our operating performance. In addition, our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly operating results or dividends, if any, to stockholders, additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies or speculation in the press or investment community, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industries we participate in or individual scandals, and in response the market price of shares of our common stock could decrease significantly. You may be unable to resell your shares of common stock at or above the initial public offering price.

In the past few years, stock markets have experienced extreme price and volume fluctuations. In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

Because we have no current plans to pay cash dividends on our common stock, you may not receive any return on your investment unless you sell your common stock for a price greater than that which you paid for it.

We have no current plans to pay cash dividends. The declaration, amount and payment of any future dividends on shares of our common stock will be at the sole discretion of our board of directors. Our board of directors may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us and such other factors as our board of directors may deem relevant. In addition, our ability to pay dividends is limited by our senior secured term loan facilities and our ABL facility and may be limited by covenants of other indebtedness we or our subsidiaries incur in the future. As a result, you may not receive any return on an investment in our common stock unless you sell your shares of our common stock for a price greater than that which you paid for it.

Investors in this offering will suffer immediate and substantial dilution.

The initial public offering price per share of common stock will be substantially higher than our pro forma net tangible book deficit per share immediately after this offering. As a result, you will pay a price per share of common stock that substantially exceeds the per share book value of our tangible assets after subtracting our liabilities. In addition, you will pay more for your shares of common stock than the amounts paid by our pre-IPO owners. Assuming an offering price of $ per share of common stock, which is the midpoint of the range on the front cover of this prospectus, you will incur immediate and substantial dilution in an amount of $ per share of common stock. See “Dilution.”

You may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise.

After this offering, we will have approximately shares of common stock authorized but unissued. Our amended and restated certificate of incorporation will authorize us to issue these shares of common stock and options, rights, warrants and appreciation rights relating to common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise. Additionally, we have reserved shares for issuance under our Omnibus Incentive Plan, including shares issuable upon the vesting of restricted stock units that we intend to grant to our employees at the time of this offering, and we have reserved shares for issuance under our Employee Stock Purchase Plan. See “Executive and Director Compensation—Optiv Inc. 2016 Omnibus Incentive Plan.” Any common stock that we issue, including under our Omnibus Incentive Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the investors who purchase common stock in this offering.

If we or our existing investors sell additional shares of our common stock after this offering, the market price of our common stock could decline.

The sale of substantial amounts of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for you to sell your shares of our common stock at a time and at a price that you deem appropriate, if at all. Upon completion of this offering, we will have a total of shares of our common stock outstanding. Of the outstanding shares, the shares sold in this offering (or shares if the underwriters exercise their over-allotment option in full) will be freely tradable without restriction or further registration under the Securities Act, except that any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act, may be sold only in compliance with the limitations described in “Shares Eligible for Future Sale.”

The remaining outstanding shares of common stock held by our pre-IPO owners and management after this offering will be subject to certain restrictions on resale. We, our officers, directors and certain holders (including the selling stockholders) of our outstanding shares of common stock immediately prior to this

offering, including our Sponsors, that collectively will own shares following this offering, will sign lock-up agreements with the underwriters that will, subject to certain customary exceptions, restrict the sale of the shares of our common stock held by them for 180 days following the date of this prospectus. Morgan Stanley & Co. LLC and Goldman, Sachs & Co. may, in their sole discretion, release all or any portion of the shares of common stock subject to lock-up agreements. See “Underwriting (Conflicts of Interest)” for a description of these lock-up agreements. See “Principal and Selling Stockholders” and “Shares Eligible for Future Sale—Lock-Up Agreements.”

Upon the expiration of the lock-up agreements described above, all of such shares will be eligible for resale in the public market, subject, in the case of shares held by our affiliates, to volume, manner of sale and other limitations under Rule 144. We expect that our Sponsors will be considered affiliates for 180 days after this offering based on their expected share ownership and their board nomination rights. Certain other of our stockholders may also be considered affiliates at that time. However, commencing 180 days following this offering, the holders of these shares of common stock will have the right, subject to certain exceptions and conditions, to require us to register their shares of common stock under the Securities Act, and they will have the right to participate in future registrations of securities by us. Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See “Shares Eligible for Future Sale.”

We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of our common stock or securities convertible into or exchangeable for shares of our common stock issued pursuant to the Amended and Restated 2014 Optiv Inc. Stock Incentive Plan or the Omnibus Incentive Plan. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market. We expect that the initial registration statement on Form S-8 will cover shares of our common stock.

As restrictions on resale end, the market price of our shares of common stock could drop significantly if the holders of these restricted shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our common stock or other securities or to use our common stock as consideration for acquisitions of other businesses, investments or other corporate purposes.

Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.

Our amended and restated certificate of incorporation and amended and restated bylaws that will become effective immediately prior to the consummation of this offering will contain provisions that may make the merger or acquisition of our company more difficult without the approval of our board of directors. Among other things, these provisions:

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would allow us to authorize the issuance of undesignated preferred stock in connection with a stockholder rights plan or otherwise, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock;

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prohibit stockholder action by written consent from and after the date on which Blackstone and its affiliates cease to beneficially own at least 30% of the total voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors;

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provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws and that our stockholders may only amend our bylaws with the approval of 66²⁄₃% or more of all of the outstanding shares of our capital stock entitled to vote, if Blackstone and its affiliates beneficially own less than 30% in voting power of our stock entitled to vote generally in the election of directors; and

•

establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.

Further, as a Delaware corporation, we are also subject to provisions of Delaware law, which may impair a takeover attempt that our stockholders may find beneficial. These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of our company, including actions that our stockholders may deem advantageous, or negatively affect the trading price of our common stock. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.

Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with the Company or the Company’s directors, officers or other employees.

Our amended and restated certificate of incorporation will provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (1) derivative action or proceeding brought on behalf of our Company, (2) action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or stockholder of our Company to the Company or the Company’s stockholders, (3) action asserting a claim against the Company or any director, officer, employee or stockholder of the Company arising pursuant to any provision of the Delaware General Corporation Law (the “DGCL”) or our amended and restated certificate of incorporation or our amended and restated bylaws, or (4) action asserting a claim against us or any director, officer, employee or stockholder of the Company governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in any shares of our capital stock shall be deemed to have notice of and to have consented to the forum provisions in our amended and restated certificate of incorporation. This choice-of-forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or the Company’s directors, officers or other employees, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our amended and restated certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “trends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors include but are not limited to those described under “Risk Factors.” These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

MARKET AND INDUSTRY DATA

This prospectus includes market and industry data and forecasts that we have derived from independent consultant reports, publicly available information, various industry publications, other published industry sources (including 451 Research, Cisco, Gartner, Inc. (“Gartner”), McKinsey and Verizon) and our internal data and estimates. Independent consultant reports, industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be reliable.

The source of certain statistical data, estimates and forecasts contained in this prospectus are the following independent industry publications or reports:

•

Gartner, Forecast: Information Security Worldwide, 2014-2020, 2Q16 Update—25 August 2016

•

Gartner, Security Outsourcing Changes Channel Realities for Security Technology Providers—25 August 2015

•

Gartner, Magic Quadrant for Security Awareness Computer-Based Training—25 October 2016

•

Verizon, 2016 Data Breach Investigations Report—April 2016

•

451 Research, Palo Alto Networks, Cisco and Dell are Top Vendors for Intrusion Detection and Prevention—09 July 2015

•

CB Insights, Overfunded? Cybersecurity Startups See Investment Slowdown—19 July 2016

•

The Channel Co., CRN 2016 Solution Provider 500

•

FireEye and Mandiant, A FireEye Company, Cybersecurity’s Maginot Line: A Real-World Assessment of the Defense-in-Depth Model—2014

The Gartner Reports described herein (the “Gartner Reports”) represent data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this prospectus) and the opinions expressed in the Gartner Reports are subject to change without notice. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Our internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and our management’s understanding of industry conditions. Although we believe that such information is reliable, we have not had this information verified by any independent sources.

TRADEMARKS, SERVICE MARKS AND TRADE NAMES

Optiv, Accuvant and FishNet Security and other trademarks, trade names and service marks of Optiv appearing in this prospectus are the property of Optiv and its affiliates.

Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus are without the ^® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks, service marks and trade names. All trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners.

USE OF PROCEEDS

We estimate that the net proceeds to Optiv Inc. from this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions, will be approximately $ million. A $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease, as applicable, the net proceeds to Optiv Inc. from this offering by approximately $ million, assuming the number of shares offered by us remains the same as set forth on the cover page of this prospectus and after deducting the estimated underwriting discounts and commissions.

We intend to use a portion of the net proceeds from this offering to repay a portion of our outstanding indebtedness and the remainder, if any, for general corporate purposes.

Pending specific application of these proceeds, we expect to invest them primarily in short-term demand deposits at various financial institutions.

We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders (including any sales pursuant to the over-allotment option).

DIVIDEND POLICY

In the nine months ended September 30, 2016, we paid dividends on our stock options of $0.2 million and did not pay any dividends on our common stock. In the year ended December 31, 2015, we paid dividends on our common stock and stock options of $241.8 million and $0.2 million, respectively. We did not pay any dividends on our common stock and stock options in 2014.

CAPITALIZATION

The following table sets forth our consolidated cash and cash equivalents and capitalization as of September 30, 2016:

•

on a historical basis; and

•

on an as adjusted basis to reflect:

•

the sale by us of shares of common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus; and

•

the application of the net proceeds from this offering as described under “Use of Proceeds” as if this offering and the application of the net proceeds of this offering had occurred on September 30, 2016.

The information below is illustrative only and our capitalization following this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. Cash and cash equivalents are not components of our total capitalization. You should read this table together with the other information contained in this prospectus, including “Use of Proceeds,” “Unaudited Pro Forma Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and related notes thereto included elsewhere in this prospectus.


	September 30, 2016
	Actual			As Adjusted⁽¹⁾
	(Dollars in thousands, except per share amounts)
Cash and cash equivalents	$	15,315		$

Long-term debt, including the current portion on long-term debt⁽²⁾	$	633,181		$
Temporary equity—241 shares⁽³⁾		2,560
Common stock, par value $0.01 per share, 5,000 shares authorized and 2,205 shares issued and outstanding, actual; and shares authorized and shares issued and outstanding, as adjusted basis		—
Additional paid-in capital		2,224
Retained earnings (deficit)		(40,188	)
Accumulated other comprehensive income		283

Total stockholders’ equity (deficit)		(37,681	)

Total capitalization	$	598,060		$

(1)

To the extent we change the number of shares of common stock sold by us in this offering from the shares we expect to sell or we change the initial public offering price from the $ per share assumed initial public offering price, representing the midpoint of the price range set forth on the cover page of this prospectus, or any combination of these events occurs, the net proceeds to us from this offering and each of total stockholders’ equity and total capitalization may increase or decrease. A $1.00 increase (decrease) in the assumed initial public offering price per share, assuming no change in the number of shares to be sold, would increase (decrease) the net proceeds that we receive in this offering and each of total stockholders’ equity and total capitalization by approximately $ . An increase (decrease) of 1,000,000 shares in the expected number of shares to be sold in the offering, assuming no change in the assumed initial offering price per share, would increase (decrease) our net proceeds from this offering and our total stockholders’ equity and total capitalization by approximately $ .

(2)

Long-term debt excludes deferred financing costs of $18.6 million. As of September 30, 2016, long-term debt included outstanding borrowings under our ABL facility of $52.7 million, $403.9 million under our senior secured first lien term loan facility, $195.0 million under our senior secured second lien term loan facility, $0.2 million under our State of Maryland term loan and $0.04 million under our State of Kansas term loan. As of September 30, 2016, we had $52.0 million remaining availability under our ABL facility.

(3)	Reflects the carrying value of common stock subject to put rights upon death or disability of the holders that is classified as temporary equity. The put right will expire upon the effective date of an initial public offering.

DILUTION

If you invest in shares of our common stock, your investment will be immediately diluted to the extent of the difference between the initial public offering price per share of common stock and the pro forma net tangible book value per share of common stock after this offering. Dilution results from the fact that the per share offering price of the shares of common stock is substantially in excess of the pro forma net tangible book value per share attributable to our pre-IPO owners.

Our pro forma net tangible book deficit as of September 30, 2016 was approximately $ , or $ per share of common stock. Pro forma net tangible book value represents the amount of total tangible assets less total liabilities, and pro forma net tangible book value per share of common stock represents pro forma net tangible book value divided by the number of shares of common stock outstanding.

After giving effect to this offering and the application of the proceeds therefrom as described in “Use of Proceeds,” our pro forma net tangible book value as of September 30, 2016 would have been $ , or $ per share of common stock. This represents an immediate dilution in net tangible book value of $ per share of common stock to our pre-IPO owners and an immediate dilution in net tangible book value of $ per share of common stock to investors in this offering.

The following table illustrates this dilution on a per share of common stock basis assuming the underwriters do not exercise their over-allotment option:


Assumed initial public offering price per share of common stock		$
Pro forma net tangible book deficit per share of common stock as of September 30, 2016	$
Increase in pro forma net tangible book value per share of common stock attributable to investors in this offering	$

Pro forma net tangible book value per share of common stock after the offering		$

Dilution in pro forma net tangible book value per share of common stock to investors in this offering		$

The following table summarizes, as of September 30, 2016, the total number of shares of common stock purchased from us, the total cash consideration paid to us, and the average price per share paid by pre-IPO owners and by investors in this offering. As the table shows, new investors purchasing shares in this offering will pay an average price per share substantially higher than our pre-IPO owners paid. The table below reflects an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, for shares purchased in this offering and excludes underwriting discounts and commissions and estimated offering expenses payable by us:

Shares of Common Stock
Purchased

Total
Consideration

Average
Price Per
Share of
Common Stock

Number

Percent

Amount

Percent

(In thousands)

Pre-IPO owners

Investors in this offering

Total

Each $1.00 increase in the assumed offering price of $ per share would increase total consideration paid by investors in this offering by $ million, assuming the number of shares offered by us remains the same and after deducting estimated underwriting discounts and commissions. A $1.00 decrease in the assumed initial public offering price per share would result in equal changes in the opposite direction.

The dilution information above is for illustrative purposes only. Our net tangible book value following the consummation of this offering is subject to adjustment based on the actual initial public offering price of our shares and other terms of this offering determined at pricing.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The unaudited pro forma consolidated financial statements have been prepared to reflect the following (collectively, the “Transactions”):

•

the merger of Firewall and its subsidiaries, including FishNet Security, with and into the Company on January 28, 2015 (the “FishNet Security Merger”);

•

the entry into the senior secured first lien term loan facility and senior secured second lien term loan facility (each as defined under “Description of Certain Indebtedness”) to finance the FishNet Security Merger, the entry into the ABL facility (as defined under “Description of Certain Indebtedness”) and repayment of Accuvant’s prior secured term loan and acquired FishNet Security debt on January 28, 2015;

•

amendments to increase the senior secured first lien term loan facility and second lien term loan facility on May 13, 2015 to partially finance a dividend payment to stockholders; and

•

the sale of shares of common stock by us in this offering at the initial public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus) and the application of the net proceeds therefrom (the “Offering”).

The following unaudited pro forma consolidated financial statements have been prepared using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, which we refer to as ASC 805. The historical consolidated financial statements have been adjusted in the unaudited pro forma consolidated financial statements to give effect to pro forma events that are directly attributable to the Transactions, factually supportable and with respect to the statements of operations, expected to have a continuing impact on our consolidated results.

The unaudited pro forma consolidated financial statements have been derived from and should be read in conjunction with the accompanying notes to the unaudited pro forma consolidated financial statements, the audited consolidated financial statements of Optiv for the year ended December 31, 2015 and the unaudited financial statements of Optiv for the nine months ended September 30, 2016 and 2015.

The unaudited pro forma consolidated statements of operations for the year ended December 31, 2015 and the nine months ended September 30, 2015 combine the historical results of operations of Optiv and FishNet Security and gives effect to the Transactions as if they had occurred on January 1, 2015. The FishNet Security Merger and the related financing activity are already reflected in Optiv’s historical consolidated statement of operations as of and for the nine months ended September 30, 2016. FishNet Security is an indirect wholly-owned subsidiary of Firewall and holds substantially all of the assets of Firewall while Firewall is a holding entity and has no operations outside those of FishNet Security. The Firewall and FishNet Security financial statements are substantially identical other than long-term debt held at Firewall and related accrued interest, all of which was repaid in connection with the FishNet Security Merger. As part of the FishNet Security Merger, Optiv became the parent entity of Accuvant and FishNet Security on January 28, 2015. The historical results of operations are those of Accuvant prior to January 28, 2015 and Optiv (including Accuvant) commencing on January 28, 2015. The FishNet Security Merger was accounted for as the acquisition of FishNet Security by Accuvant as of January 28, 2015.

The Optiv unaudited pro forma consolidated balance sheet as of September 30, 2016 gives effect to the stock split and the sale of common stock in this offering, including the application of the net proceeds therefrom, as if these transactions had occurred on September 30, 2016. The FishNet Security Merger and the related financing activity are already reflected in Optiv’s historical balance sheet as of September 30, 2016.

Following the offering, we will incur costs associated with being a U.S. publicly traded company. Such costs will include new or increased expenses for such items as insurance, directors’ fees, accounting work, legal

advice and compliance with applicable U.S. regulatory and stock exchange requirements, including costs associated with compliance with the Sarbanes-Oxley Act and periodic or current reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). No pro forma adjustments have been made to reflect such costs due to the fact that they currently are not objectively determinable.

The unaudited pro forma consolidated financial statements are for illustrative and informational purposes only and are not intended to represent or be indicative of what our financial condition or results of operations would have been had the above transactions occurred on the dates indicated. The unaudited pro forma consolidated financial statements also should not be considered representative of our future financial condition or results of operations.

The information contained in the statements below should be read in conjunction with “Summary—Summary Historical and Pro Forma Financial and Other Data,” “Selected Historical Consolidated Financial Data,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated audited financial statements and the related notes thereto included elsewhere in this prospectus.

Optiv Inc. and Subsidiaries

Unaudited Pro Forma Consolidated Balance Sheet

As of September 30, 2016

(Amounts in thousands, except share and per share data)


	Optiv Historical			Pro Forma Offering Adjustments	Note 5	Total Pro Forma Consolidated
Assets
Current assets:
Cash and cash equivalents	$	15,315
Accounts receivable net of allowance of $1,469		328,512
Income tax receivable		2,006
Other current assets		48,138

Total current assets	$	393,971

Property and equipment, net		15,927
Intangible assets, net		181,694
Goodwill		426,410
Other assets		1,855

Total assets	$	1,019,857

Liabilities, Temporary Equity and Stockholders’ Equity
Current Liabilities
Accounts payable	$	276,938
Accrued expenses		54,838
Deferred revenue		30,064
Revolving credit note and current portion long-term debt		4,100

Total current liabilities		365,940

Other liabilities		1,173
Long-term debt, net of current portion		629,081
Long-term deferred tax liability		58,784

Total long-term liabilities		689,038

Commitment and contingencies
Temporary equity—common shares, subject to put right, 241 shares		2,560

Stockholders’ equity:
Successor common shares, $0.01 par value, authorized 5,000 with 2,205 issued and outstanding		—
Additional paid-in capital		2,224
Retained earnings (deficit)		(40,188	)
Accumulated other comprehensive income (loss)		283

Total stockholders’ equity		(37,681	)

Total liabilities, temporary equity and stockholders’ equity	$	1,019,857

The accompanying notes are an integral part of these unaudited pro forma financial statements.

Optiv Inc. and Subsidiaries

Unaudited Pro Forma Consolidated Statement of Operations

For the Nine Months Ended September 30, 2016

(Amounts in thousands, except share and per share data)


	Optiv Historical					Total Optiv
	For the Nine Months Ended September 30, 2016			Pro Forma Offering Adjustments	Note 5	Pro Forma Combined
Revenue:
Products	$	371,652
Subscriptions, maintenance and support		118,687
Security services		153,416

Total revenue		643,755
Costs of sales:
Products		307,570
Security services		96,792

Total costs of sales		404,362

Gross profit		239,393
Operating expenses:
Selling, general and administrative expenses		183,926
Amortization of acquired intangibles		16,075
Other expense		9,980

Total operating expenses		209,981

Operating income		29,412
Nonoperating income (expense):
Other income		19
Interest expense		(37,690	)
Net foreign currency exchange gain (loss)		(86	)

Income (loss) before income tax expense		(8,345	)
Income tax benefit (expense)		2,623

Net income (loss)	$	(5,722	)

Net income (loss) per share:
Basic	$	(2,413	)

Diluted	$	(2,413	)

Weighted average common shares outstanding:
Basic		2,443

Diluted		2,443

The accompanying notes are an integral part of these unaudited pro forma financial statements.

Optiv Inc. and Subsidiaries

Unaudited Pro Forma Consolidated Statement of Operations

For the Nine Months Ended September 30, 2015

(Amounts in thousands, except share and per share data)


	Optiv Historical			FishNet Security Historical			Pro Forma Acquisition Adjustments – FishNet Security Merger												Subtotal Optiv					Total Optiv
	For the Nine Months Ended September 30, 2015			For the period January 1 to January 27, 2015 (Note 3)			Pro Forma Acquisition Adjustments – FishNet Security Merger			Note 5			Pro Forma Financing Adjustments			Note 5			Pro Forma Prior to Offering Adjustments			Pro Forma Offering Adjustments	Note 5	Pro Forma Consolidated
Revenue:
Products	$	447,001		$	12,807		$	—					$	—					$	459,808
Subscriptions, maintenance and support		83,369			1,917			—						—						85,286
Security services		118,107			6,011			3,853			(d	)		—						127,971

Total revenue		648,477			20,735			3,853						—						673,065
Costs of sales:
Products		374,128			11,000			—						—						385,128
Security services		76,928			3,991			—						—						80,919

Total costs of sales		451,056			14,991			—						—						466,047

Gross profit		197,421			5,744			3,853						—						207,018
Operating expenses:
Selling, general and administrative expenses		151,831			7,105			—						—						158,936
Amortization of acquired intangibles		19,939			1,784			(785	)		(b	)		—						20,938
Other expense		24,169			13,007			(25,240	)		(a	)		—						11,936

Total operating expenses		195,939			21,896			(26,025	)					—						191,810

Operating income		1,482			(16,152	)		29,878						—						15,208
Nonoperating income (expense):
Other income		11			—			—						—						11
Interest expense		(32,546	)		(790	)		—						(3,303	)		(e	)		(36,639	)
Net foreign currency exchange gain (loss)		(157	)		—			—						—						(157	)

Income (loss) before income tax expense		(31,210	)		(16,942	)		29,878						(3,303	)					(21,577	)
Income tax benefit (expense)		9,312			6,667			(9,143	)		(c	)		1,156			(c	)		7,992

Net income (loss)	$	(21,898	)	$	(10,275	)	$	20,735					$	(2,147	)				$	(13,585	)

Net income (loss) per share:
Basic	$	(9,267	)																$	(5,611	)

Diluted	$	(9,267	)																$	(5,611	)

Weighted average common shares outstanding:
Basic		2,363															(f	)		2,421

Diluted		2,363															(f	)		2,421

The accompanying notes are an integral part of these unaudited pro forma financial statements.

Optiv Inc. and Subsidiaries

Unaudited Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2015

(Amounts in thousands, except share and per share data)


	Optiv Historical			FishNet Security Historical			Pro Forma Acquisition Adjustments – Optiv Acquisition of FishNet Security												Subtotal Optiv					Total Optiv
	For the Year Ended December 31, 2015			For the period January 1 to January 27, 2015 (Note 3)						Note 5			Pro Forma Financing Adjustments			Note 5			Pro Forma Prior to Offering Adjustments			Pro Forma Offering Adjustments	Note 5	Pro Forma Consolidated
Revenue:
Products	$	650,071		$	12,807		$	—					$	—					$	662,878
Subscriptions, maintenance and support		132,893			1,917			—						—						134,810
Security services		164,312			6,011			4,600			(d	)		—						174,923

Total revenue		947,276			20,735			4,600						—						972,611
Costs of sales:
Products		542,870			11,000			—						—						553,870
Security services		106,105			3,991			—						—						110,096

Total costs of sales		648,975			14,991			—						—						663,966

Gross profit		298,301			5,744			4,600						—						308,645
Operating expenses:
Selling, general and administrative expenses		214,276			7,105			—						—						221,381
Amortization of acquired intangibles		25,190			1,784			(785	)		(b	)		—						26,189
Other expense		32,701			13,007			(25,240	)		(a	)		—						20,468

Total operating expenses		272,167			21,896			(26,025	)					—						268,038

Operating income (loss)		26,134			(16,152	)		30,625						—						40,607
Nonoperating income (expense):
Other income		11			—			—						—						11
Interest expense		(45,339	)		(790	)		—						(3,303	)		(e	)		(49,432	)
Net foreign currency exchange loss		(707	)		—			—						—						(707	)

Income (loss) before income tax expense		(19,901	)		(16,942	)		30,625						(3,303	)					(9,521	)

Income tax benefit (expense)		5,543			6,667			(9,404	)		(c	)		1,156			(c	)		3,962

Net income (loss)	$	(14,358	)	$	(10,275	)	$	21,221					$	(2,147	)				$	(5,559	)

Earnings (loss) per share:

Basic	$	(6,027	)																$	(2,292	)

Diluted	$	(6,027	)																$	(2,292	)

Weighted average common shares outstanding

Basic		2,382															(f	)		2,425

Diluted		2,382															(f	)		2,425

The accompanying notes are an integral part of these unaudited pro forma financial statements.

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

1. Description of the Transactions

On January 28, 2015, the Company completed a merger with Firewall pursuant to an Agreement and Plan of Merger dated as of November 4, 2014 (“Firewall Merger Agreement”). Pursuant to the Firewall Merger Agreement, AF Security Holdings Corp. was incorporated on October 23, 2014 and became a privately-held parent entity of Accuvant and Firewall on January 28, 2015 through a series of common stock transactions. On June 22, 2015, AF Security Holdings Corp. changed its name to Optiv Inc. The FishNet Security Merger was treated as an acquisition of Firewall, including its wholly owned subsidiary, FishNet Security, by the Company. The total purchase price was approximately $378 million, which was funded by the proceeds from the senior secured first lien term loan facility and the senior secured second lien term loan facility and the Company’s and Firewall’s existing liquidity. A portion of the term loan proceeds was also used to pay off Accuvant’s prior secured term loan as well as Firewall’s existing debt. The Blackstone Entities maintained a majority ownership in the consolidated Company, however, current investors of both organizations maintained a minority equity interest.

As of May 13, 2015, the Company entered into Amendment No. 1 to the senior secured first lien term loan facility and Amendment No. 1 to the senior secured second lien term loan facility to increase the initial term loan commitments by $110 million and $85 million, respectively, in order to finance a dividend payment to the existing stockholders.

The Company is offering shares of common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus. The Company intends to use the net proceeds from this offering to repay a portion of its outstanding indebtedness and the remainder, if any, for general corporate purposes.

2. Basis of Presentation

The unaudited pro forma consolidated financial statements were prepared in accordance with GAAP and pursuant to Regulation S-X Article 11, and present the pro forma financial condition and results of operations of both companies based upon the historical information after giving effect to the Transactions and adjustments described in these footnotes. The unaudited pro forma consolidated statements of operations for the nine month period ended September 30, 2016, the nine month period ended September 30, 2015 and the year ended December 31, 2015 are presented as if the Transactions had occurred on January 1, 2015. The historical consolidated statement of operations for the nine months ended September 30, 2016 already reflects the FishNet Security Merger and the related financing activity, and gives effect to the Offering as if it had occurred on January 1, 2015. The unaudited pro forma consolidated balance sheet is presented as if the Offering had occurred on September 30, 2016 and already reflects the FishNet Security Merger and the related financing activity.

The Transactions are reflected in the unaudited pro forma consolidated financial statements as being accounted for under the acquisition method in accordance with ASC 805, with the Company treated as the accounting acquirer for the FishNet Security Merger. In accordance with ASC 805, the assets acquired and the liabilities assumed have been measured at fair value based on various estimates. These estimates are based on key assumptions related to the Transactions, including reviews of publicly disclosed information for other acquisitions in the industry, historical experience of the companies, data that was available through the public domain and due diligence reviews of the acquiree businesses.

For purposes of measuring the estimated fair value, where applicable, of the assets acquired and the liabilities assumed as reflected in the unaudited pro forma consolidated financial information, the Company has applied the guidance in ASC 820, Fair Value Measurements and Disclosures, which we refer to as ASC 820, which establishes a framework for measuring fair value. In accordance with ASC 820, fair value is an exit price and is defined as “the

price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Under ASC 805, acquisition-related transaction costs and acquisition-related restructuring charges are not included as components of consideration transferred but are accounted for as expenses in the period in which the costs are incurred. In addition, the unaudited pro forma consolidated financial statements do not reflect any cost savings, operating synergies or revenue enhancements that the consolidated company may achieve as a result of the Transactions, the costs to integrate the operations of the companies or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements.

3. FishNet Security Historical

Financial information in the “FishNet Security Historical” columns in the unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2015 and the year ended December 31, 2015 represent the results of operations of FishNet Security as a stand-alone entity for the period from January 1 to January 27, 2015 (period before the FishNet Security Merger). Such financial information has been reclassified to conform to the presentation in the Optiv statements of operations as set forth below.

Pro forma reclassifications to the FishNet Security historical consolidated statement of operations for the period from January 1 to January 27, 2015:


	FishNet Security Historical Consolidated Statement of Operations		Reclassification			FishNet Security Pro Forma Consolidated Statement of Operations
(In thousands)	(Unaudited)					(Unaudited)
Revenue:
Net revenue	$	20,735	$	(20,735	)^(a)	$	—
Products		—		12,807	^(a)		12,807
Subscriptions, maintenance and support		—		1,917	^(a)		1,917
Security services		—		6,011	^(a)		6,011
Cost of Sales:
Cost of sales		14,991		(14,991	)^(b)		—
Products		—		11,000	^(b)		11,000
Security services		—		3,991	^(b)		3,991
Selling, general and administrative expense		6,775		330	^(c)		7,105
Depreciation and amortization expense		2,114		(2,114	)^(c)		—
Amortization of acquired intangibles		—		1,784	^(c)		1,784

(a)	Represents the reclassification of “Net revenue” of approximately $20.7 million (1) to “Products” of approximately $12.8 million, (2) to “Subscriptions, maintenance and support” of approximately $1.9 million and (3) to “Security Services” of approximately $6.0 million for service revenues.

(b)	Represents the reclassification of “Cost of sales” of approximately $15.0 million (1) to “Products” of approximately $11.0 million for product costs of sales and (2) to “Security Services” of approximately $4.0 million for service costs of sales.

(c)

Represents the reclassification of “Depreciation and amortization expense” of approximately $2.1 million (1) to “Amortization of acquired intangibles” of approximately $1.8 million for the amortization of acquired intangible assets and (2) to “Selling, general and administrative expense” of approximately $0.3 million for the depreciation of property and equipment.

4. Purchase Price Allocation Considerations

(1)

Property and equipment assets are depreciated on a straight-line basis over their estimated useful lives, generally over a three-year to five-year period.

(2)

Identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives. The fair value of the identifiable intangible assets and their expected useful lives are as follows:


(In thousands)	Value at Acquisition Date		Expected Useful Life
Customer Relationships—FishNet Security Merger	$	135,000	10 years

(3)	Goodwill is calculated as the difference between the acquisition dates fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized and is not deductible for tax purposes.

5. Pro Forma Adjustments in Connection with the Transactions

Pro forma consolidated balance sheet

The following summarizes the pro forma adjustments to give effect to the Transactions as if they had occurred on September 30, 2016 for purposes of the pro forma consolidated balance sheet:

(a)

Reflects the use of a portion of the net proceeds from this offering to repay $ million principal amount of our indebtedness.

(b)

Reflects estimated gross proceeds from the sale of shares of common stock by us in this offering at the assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus), net of underwriting discounts and commissions of approximately $ million, in the aggregate, and additional estimated expenses related to the offering of approximately $ million.

Pro forma consolidated statements of operations

The following summarizes the pro forma adjustments to give effect to the Transactions as if they had occurred on January 1, 2015 for purposes of the pro forma consolidated statements of operations:

(a)

Represents the reversal of non-recurring transaction costs which are directly attributable to the Transactions and included in the historical statement of operations for the nine months ended September 30, 2015 and the year ended December 31, 2015.


(In thousands)	Nine Months Ended September 30, 2015		Year Ended December 31, 2015
FishNet Security Merger—Transaction costs^(a)	$	25,240	$	25,240

All transaction costs recognized in 2015 were incurred in the nine months ended September 30, 2015. No adjustments were made for the nine months ended September 30, 2016 as no transaction costs attributable to the Transactions were incurred in that period.

(b)

Represents the incremental amortization of the fair value of identified intangible assets with definite lives for the nine months ended September 30, 2015 and the year ended December 31, 2015. The incremental amortization expense for intangible assets is calculated using the straight line method over the estimated remaining useful lives of the assets, less the historical amortization expense related to the acquired intangibles, if any.


Customer Relationships—FishNet Security Merger (In thousands)	Nine Months Ended September 30, 2015			Year Ended December 31, 2015
Estimated amortization expense	$	999		$	999
Elimination of historical amortization expense		(1,784	)		(1,784	)

Incremental Amortization—FishNet Security Merger^(b)	$	(785	)	$	(785	)

In connection with the FishNet Security Merger, we recorded customer relationship intangible assets totaling $135.0 million, with estimated useful lives of 10 years, as disclosed in Note 4 above. Prior to the FishNet Security Merger, FishNet Security had gross intangible assets for customer relationships totaling approximately $130.1 million, with a six-year estimated useful life. The longer estimated useful lives of customer relationships recorded in connection with the FishNet Security Merger leads to a pro forma reduction in estimated amortization expense as disclosed in the table above.

No adjustments were made to the statement of operations for the nine months ended September 30, 2016 as the historical amortization expense for that period includes the incremental amortization of the fair value of identified intangible assets with definite lives.

(c)

Represents the income tax effect for adjustments related to the Transactions using a 35% statutory tax rate, excluding the non-deductible portion of transaction costs incurred in connection with the FishNet Security Merger of approximately $3.8 million for the nine months ended September 30, 2015 and the year ended December 31, 2015.

(d)

As part of the FishNet Security purchase price allocation as of January 28, 2015, the estimated fair value of the deferred revenue liability as of the valuation date was adjusted downward by approximately $4.6 million for Security Services provided over a period of less than 12 months. There was a reduction in revenue of approximately $3.9 million and $4.6 million in the historical consolidated financial statements for the nine months ended September 30, 2015 and the year ended December 31, 2015, respectively, as a result of this purchase price adjustment. Under the assumption that the FishNet Security Merger occurred on January 1, 2015, this reduction to revenue has been reversed in the unaudited pro forma consolidated financial statements as this was a non-recurring adjustment directly related to the acquisition. This adjustment does not affect the nine months ended September 30, 2016.

(e)

Represents the increased interest expense for the nine months ended September 30, 2015 and the year ended December 31, 2015 and reflects pro forma (i) interest expense associated with the first lien term loan of $300 million and second lien term loan of $110 million entered into on January 28, 2015 to finance the FishNet Security Merger, using the effective interest method, (ii) interest expense related to an increased commitment under the JP Morgan Chase credit facility from $50 million to $75 million, and (iii) elimination of interest expense on FishNet Security debt and the Credit Suisse secured term loan that was extinguished as part of the FishNet Security Merger on January 28, 2015. Items (i), (ii) and (iii) above reflect interest expense adjustments for the period from January 1, 2015 to January 27, 2015 (before the FishNet Security Merger).

We also incurred a loss on debt extinguishment of approximately $3.6 million for the nine months ended September 30, 2015 and the year ended December 31, 2015. This was a one-time, non-recurring loss related to the extinguishment of the Credit Suisse secured term loan directly attributable to the refinancing in connection with the FishNet Security Merger. This amount was recorded in interest expense in the historical statement of operations and has been reversed in the pro forma consolidated statement of operations for the nine months ended September 30, 2015 and the year ended December 31, 2015.

Finally, this pro forma adjustment represents the increase in interest expense using the effective interest method associated with the amendments to the first and second lien term loans on May 13, 2015. We increased the commitments and drew down on the debt in the amounts of $110 million and $85 million, respectively, which was used to finance a dividend to stockholders. This adjustment reflects incremental interest expense for the period from January 1, 2015 to May 13, 2015, for the nine months ended September 30, 2015 and the year ended December 31, 2015.

A 1/8% increase (decrease) in the annual interest rate on all variable term loans would cause the net income (loss) to increase (decrease) for the nine months ended September 30, 2015 and for the year ended December 31, 2015 by $127 thousand and $752 thousand, respectively.


(In thousands)	Adjustments Nine Months Ended September 30, 2015			Adjustments Year Ended December 31, 2015
Estimated interest expense on first lien term loan	$	(1,524	)	$	(1,524	)
Estimated interest expense on second lien term loan		(858	)		(858	)
Estimated interest expense related to the increase in commitment of the ABL facility		(30	)		(30	)
Eliminate interest expense related to the secured term loan extinguished as a part of the FishNet Security Merger		491			491
Eliminate interest expense related to FishNet Security debt extinguished as a part of the FishNet Security Merger		790			790
Estimated interest expense on amended first lien term loan		(2,608	)		(2,608	)
Estimated interest expense on amended second lien term loan		(3,197	)		(3,197	)
Eliminate loss on debt extinguishment—Credit Suisse secured term loan		3,633			3,633

Total^(e)	$	(3,303	)	$	(3,303	)

The adjustments to interest expenses do not affect the nine months ended September 30, 2016 as the loans were outstanding for the duration of the period.

(f)

The following is a reconciliation of basic and diluted pro forma weighted average shares of common stock outstanding:


	Nine Months Ended September 30, 2015			Year Ended December 31, 2015
Historical weighted average shares outstanding		2,363			2,382
Adjustment to eliminate weighted average shares issued on 1/28/15 pursuant to the FishNet Security Merger		(547	)		(562	)
Adjustment for shares issued in connection with the FishNet Security Merger assuming issuance at the beginning of the period presented		605			605

Basic and diluted pro forma weighted average shares outstanding		2,421			2,425

The adjustment does not affect the nine months ended September 30, 2016 as the historical weighted average shares were outstanding in full for the entire period presented.

6. Other

One item included in the historical consolidated financial statements was not adjusted for in the unaudited pro forma consolidated financial statements as it was not directly attributable to the Transactions:

•

Given the rebranding of the consolidated company to Optiv effective July 1, 2015, we accelerated the amortization of the historical book value associated with the Accuvant trade name through June 30, 2015. In May and June of 2015, additional amortization totaling approximately $4.6 million was recorded.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

We derived the selected historical consolidated statements of operations data for the year ended December 31, 2015, the period from April 22, 2014 through December 31, 2014, the period from January 1, 2014 through April 21, 2014 and the year ended December 31, 2013 and the selected balance sheet data as of December 31, 2015 and 2014 from our audited consolidated financial statements included elsewhere in this prospectus. We derived the selected balance sheet data as of December 31, 2013 from our audited consolidated financial statements not included in this prospectus. We derived the selected historical statements of operations data and the selected historical statements of cash flows data for the nine months ended September 30, 2016 and 2015 and the selected balance sheet data as of September 30, 2016 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. We have prepared our unaudited condensed consolidated financial statements on the same basis as our audited financial statements and, in our opinion, have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results of any interim period are not necessarily indicative of the full year. Additionally, our historical results are not necessarily indicative of the results expected for any future period. Comparability of the information reflected in the selected historical consolidated financial data is impacted by the April 22, 2014 Accuvant/Blackstone Transaction, the January 28, 2015 FishNet Security Merger and the May 13, 2015 dividend payment to stockholders.

The unaudited selected pro forma financial information has been prepared to give effect to the FishNet Security Merger and the other transactions as described under “Unaudited Pro Forma Consolidated Financial Information” as if they had occurred on January 1, 2015. The following unaudited selected pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the relevant transactions had been consummated on the date indicated, nor is it indicative of future operating results.

You should read the selected historical consolidated financial data below, together with the consolidated financial statements and related notes thereto appearing elsewhere in this prospectus, as well as “Summary—Summary Historical and Pro Forma Financial and Other Data,” “Unaudited Pro Forma Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain Indebtedness,” and the other financial information included elsewhere in this prospectus.


	Pro Forma									Historical Information
										Successor												Predecessor
(Dollars in thousands, except per share data)	Nine Months Ended September 30, 2016^(A)			Nine Months Ended September 30, 2015^(A)^(B)			Year Ended December 31, 2015^(A)^(B)			Nine Months Ended September 30, 2016			Nine Months Ended September 30, 2015^(C)			Year Ended December 31, 2015^(C)			Period from April 22 to December 31, 2014^(D)			Period from January 1, 2014 to April 21, 2014^(E)			Year Ended December 31, 2013^(E)
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Selected Statements of Operations Data:
Revenue
Products	$	371,652		$	459,808		$	662,878		$	371,652		$	447,001		$	650,071		$	232,085		$	53,492		$	240,310
Subscriptions, maintenance and support		118,687			85,286			134,810			118,687			83,369			132,893			36,767			10,058			39,590
Security services		153,416			127,971			174,923			153,416			118,107			164,312			53,645			19,203			59,252

Total revenue		643,755			673,065			972,611			643,755			648,477			947,276			322,497			82,753			339,152

Costs of sales:
Products		307,570			385,128			553,870			307,570			374,128			542,870			195,081			44,315			203,831
Security services		96,792			80,919			110,096			96,792			76,928			106,105			34,644			12,811			37,685

Total costs of sales		404,362			466,047			663,966			404,362			451,056			648,975			229,725			57,126			241,516

Gross profit		239,393			207,018			308,645			239,393			197,421			298,301			92,772			25,627			97,636

Operating expenses:
Selling, general and administrative expenses		183,926			158,936			221,381			183,926			151,831			214,276			71,160			24,527			80,883
Amortization of acquired intangibles		16,075			20,938			26,189			16,075			19,939			25,190			6,042			382			1,266
Other expense		9,980			11,936			20,468			9,980			24,169			32,701			8,927			50			1,041

Total operating expenses		209,981			191,810			268,038			209,981			195,939			272,167			86,129			24,959			83,190

Operating income (loss)		29,412			15,208			40,607			29,412			1,482			26,134			6,643			668			14,446

Non-operating income (expense):
Other income		19			11			11			19			11			11			24			28			55
Interest expense		(37,690	)		(36,639	)		(49,432	)		(37,690	)		(32,546	)		(45,339	)		(4,342	)		(210	)		(1,054	)
Net foreign currency exchange gain (loss)		(86	)		(157	)		(707	)		(86	)		(157	)		(707	)		(37	)		(183	)		32

Income (loss) before income taxes		(8,345	)		(21,577	)		(9,521	)		(8,345	)		(31,210	)		(19,901	)		2,288			303			13,479

Income tax benefit (expense)		2,623			7,992			3,962			2,623			9,312			5,543			(2,399	)		1,491			(6,694	)

Net income (loss)	$	(5,722	)	$	(13,585	)	$	(5,559	)	$	(5,722	)	$	(21,898	)	$	(14,358	)	$	(111	)	$	1,794		$	6,785

Earnings (loss) per share:
Basic	$	(2,413	)	$	(5,611	)	$	(2,292	)	$	(2,413	)	$	(9,267	)	$	(6,027	)	$	(62	)

Diluted	$	(2,413	)	$	(5,611	)	$	(2,292	)	$	(2,413	)	$	(9,267	)	$	(6,027	)	$	(62	)

Cash dividends declared per share	$	—		$	—		$	99,683		$	—		$	—		$	99,683		$	—		$	—		$	—

Selected Statements of Cash Flows:
Net cash provided by (used in) operating activities										$	33,035		$	(38,731	)	$	(35,680	)	$	17,283		$	7,607		$	3,396
Net cash used in investing activities											(43,591	)		(271,739	)		(274,622	)		(2,002	)		(726	)		(3,204	)
Net cash provided by (used in) financing activities											20,958			297,776			290,300			2,042			(177	)		270
Effect of exchange rate changes on cash and cash equivalents											(96	)		220			434			(55	)		171			(60	)

Change in cash and cash equivalents										$	10,306		$	(12,474	)	$	(19,568	)	$	17,268		$	6,875		$	402


	Pro Forma	Successor									Predecessor
(In thousands)	As of September 30, 2016^(A)	As of September 30, 2016			As of December 31, 2015			As of December 31, 2014			As of December 31, 2013
	(Unaudited)	(Unaudited)
Selected Balance Sheet Data:
Cash and cash equivalents		$	15,315		$	5,009		$	24,577		$	434
Working capital⁽¹⁾			28,031			33,299			31,763			(8,361	)
Total assets⁽²⁾			1,019,857			1,155,734			455,419			201,443
Total debt⁽³⁾			633,181			612,387			76,211			25,056
Total liabilities			1,054,978			1,188,263			300,644			167,456
Temporary equity			2,560			555			16,539			—
Total stockholders’ equity (deficit)			(37,681	)		(33,084	)		138,236			33,987
Retained earnings (deficit)			(40,188	)		(34,466	)		(111	)		8,939

(A)

(B)	Reflects unaudited pro forma selected financial information giving effect to the FishNet Security Merger and the other transactions as described under “Unaudited Pro Forma Consolidated Financial Information” as if such transactions had occurred at January 1, 2015.

(C)	Reflects selected historical financial data for Accuvant for periods following the Accuvant/Blackstone Transaction, and results of operations of FishNet Security that are included from January 28, 2015.

(D)	Reflects selected financial data for Accuvant for periods following the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.

(E)	Reflects selected financial data for Accuvant for periods prior to the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.

(1)	We define working capital as total current assets less total current liabilities.

(2)	Net of accounts receivable and sales return allowances of $9.6 million, $3.0 million, $2.3 million and $1.4 million as of September 30, 2016, December 31, 2015, December 31, 2014 and December 31, 2013, respectively.

(3)	Net of deferred financing costs of $18.6 million, $20.5 million and $3.7 million as of September 30, 2016, December 31, 2015 and December 31, 2014, respectively.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the “Selected Historical Consolidated Financial Data,” “Unaudited Pro Forma Consolidated Financial Information” and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in “Forward-Looking Statements” and “Risk Factors.”

Overview

We are a market-leading provider of end-to-end cyber security solutions, ranked in the top 10% of solution providers by revenue according to the CRN Solution Provider 500. We exclusively focus on cyber security and leverage our proprietary technologies and IP, third-party products, market intelligence and scalable platform to provide comprehensive and optimized solutions to our clients. Our team of over 1,700 employees includes over 1,300 cyber security experts who plan, build and run cyber security programs tailored to our clients’ needs. Through our strong partnerships with over 400 established and emerging security software providers and hardware manufacturers, we offer our clients a broad portfolio of cyber security products and services, along with strategic advice and ongoing management of their security infrastructure. Formed through the merger of Accuvant and FishNet Security, we believe we are the largest pure-play, vendor-agnostic cyber security solutions provider in North America. Over the past three years, our diversified, blue-chip client base has included 71 of the Fortune 100 and 604 of the Fortune 1000, and we have served over 7,500 clients in 76 countries.

We derive revenue through our Security Technology and Security Services segments. Through our Security Technology business, we provide our clients a complete range of security product advice and services, including client needs analyses, product evaluation and testing, product procurement and security vendor management. We also help implement and integrate these products into their networks. Our Security Services business consists of security consulting, MSS, incident response, support services and strategic staffing. In our MSS business, we manage and monitor our clients’ security operations 24x7 from our three SOCs.

We design our client engagement teams around our clients and provide expertise and engagement throughout the lifecycle of projects. As of September 30, 2016, we had over 1,700 employees, with over 1,300 cyber security experts, including over 290 client managers and over 250 client advisors. Our Office of the CISO offers our clients advisory services from seasoned CISOs and subject-matter expert advisors who help create security strategies and provide industry-wide thought leadership and best practices. In the nine months ended September 30, 2016, we served over 4,200 clients. We have been successful in expanding our business with clients over time. Over the six years ended September 30, 2016, on average, our returning clients have spent nearly twice as much with us in the second year they do business with us than they spent in the first. Our average annual spend per client increased 42% from 2014 to 2015 and 6% for the twelve months ended September 30, 2016 compared to the twelve months ended September 30, 2015.

Our Reportable Segments

We have two reportable segments: Security Technology and Security Services.

Security Technology: We generate revenue through the sale of third-party information security hardware and software products as well as services provided by third parties. We partner with industry-leading security product manufacturers and continuously evaluate new and emerging players in the cyber security industry to provide our clients with leading solutions. We provide insight into the technology that best fits our clients’ needs and challenges. We help these clients objectively compare potential product solutions and determine the most appropriate technology for their business and technical requirements. As technical experts, we identify, select, implement, integrate and ultimately optimize and maintain support for the products that we sell to our clients.

To deliver best-of-breed products, we work with over 400 established and emerging software providers and hardware manufacturers, enabling us to provide a full suite of potential IT security solutions to our clients with start-to-finish support from selection to implementation to maintenance. We often provide our security services to clients alongside sales of security technology products. Our security services teams are typically involved in larger sales of security technology products. However, each of our security consulting engagements also, where appropriate, makes technology recommendations to our clients to resolve a particular security need.

Security Services: We bring together our security services experience in security operations (including MSS), enterprise consulting, training and support. We offer strategy and management, monitoring and operations and defenses and controls, with specific focuses on cloud, mobility, data protection and the internet. Through our depth and breadth of offerings, extensive capabilities and proven expertise in cyber security strategy, regulatory compliance, tactics and technology, we help companies, governments and educational institutions address their full range of cyber risk and security needs in a customized and integrated fashion, enabling them to plan, build and run successful security programs to achieve their business objectives. Each of these services is delivered by our security consultants under either a fixed fee arrangement or a time and materials arrangement.

Recent Highlights

Year ended December 31, 2015 financial and operating highlights include:

•

On a historical basis, revenue was $947.3 million, an increase of approximately 134% compared to the year ended December 31, 2014. On a pro forma basis, our revenue for the year ended December 31, 2015 was $972.6 million, an increase of approximately 24% from the year ended December 31, 2014.

•

On a historical basis, revenue for our Security Technology segment was $783.0 million, an increase of approximately 136% compared to the year ended December 31, 2014. On a pro forma basis, revenue for our Security Technology segment for the year ended December 31, 2015 was $797.7 million, an increase of approximately 26% from the year ended December 31, 2014.

•

On a historical basis, revenue for our Security Services segment was $164.3 million, an increase of approximately 126% compared to the year ended December 31, 2014. On a pro forma basis, revenue for our Security Services segment for the year ended December 31, 2015 was $174.9 million, an increase of approximately 16% from the year ended December 31, 2014.

•

On a historical basis, gross margin was 31%, an increase from 29% in the year ended December 31, 2014. On a pro forma basis, gross margin was 32% and 31% for the years ended December 31, 2015 and 2014, respectively.

•

On a historical basis, Adjusted EBITDA margin was 10%, an increase from 7% in the year ended December 31, 2014. On a pro forma basis, Adjusted EBITDA margin was 10%, an increase from 9% in the year ended December 31, 2014.

•

We transacted with 5,000 clients.

Nine months ended September 30, 2016 financial and operating highlights include:

•

On a historical basis, revenue was $643.8 million, a decrease of approximately 1% compared to the nine months ended September 30, 2015. On a pro forma basis, our revenue for the nine months ended September 30, 2016 was $643.8 million, a decrease of approximately 4% from the nine months ended September 30, 2015.

•

On a historical basis, revenue for our Security Technology segment was $490.3 million, a decrease of approximately 8% compared to the nine months ended September 30, 2015. On a pro forma basis, revenue for our Security Technology segment for the nine months ended September 30, 2016 was $490.3 million, a decrease of approximately 10% from the nine months ended September 30, 2015.

•

On a historical basis, revenue for our Security Services segment was $153.4 million, an increase of approximately 30% compared to the nine months ended September 30, 2015. On a pro forma basis, revenue for our Security Services segment for the nine months ended September 30, 2016 was $153.4 million, an increase of approximately 20% from the nine months ended September 30, 2015.

•

On a historical basis, gross margin was 37%, an increase from 30% in the nine months ended September 30, 2015. On a pro forma basis, gross margin was 37% and 31% for the nine months ended September 30, 2016 and 2015, respectively.

•

On a historical basis, Adjusted EBITDA margin was 10% for the nine months ended September 30, 2016, an increase from 9% for the nine months ended September 30, 2015. On a pro forma basis, Adjusted EBITDA margin was 10%, an increase from 8% in the nine months ended September 30, 2015.

•

We transacted with over 4,200 clients.

Significant Transactions

On April 22, 2014, Accuvant was acquired by a company formed at the direction of Blackstone alongside Sverica and certain members of Accuvant’s executive management (collectively, referred to as the “Accuvant/Blackstone Transaction”). As a result of the Accuvant/Blackstone Transaction, Accuvant elected to apply pushdown accounting and a new basis of accounting was created on April 22, 2014. We are required to present separately our operating results for the Predecessor period ended April 21, 2014 and the Successor period commencing on April 22, 2014. The Successor and Predecessor operating results are not comparable primarily due to the Successor operating results reflecting the application of pushdown accounting commencing on April 22, 2014, of which the most significant implications are increased depreciation and amortization of acquired intangibles expense and increased interest expense associated with debt financing arrangements subsequently pushed down to the consolidated balance sheet.

On January 28, 2015, Accuvant completed the merger of FishNet Security (the “FishNet Security Merger”) to form Optiv for a total transaction value of approximately $378 million. Following the FishNet Security Merger, Optiv was owned by Blackstone, Sverica International Investment Fund III LP and certain members of the management of Accuvant as well as the prior owners of FishNet Security, including Investcorp and certain members of FishNet Security’s executive management. As part of the FishNet Security Merger, Optiv became the parent entity of Accuvant and FishNet Security on January 28, 2015. The historical results of operations discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are those of Accuvant prior to January 28, 2015 and Optiv including Accuvant commencing on January 28, 2015. The FishNet Security Merger was accounted for as the acquisition of FishNet Security by Accuvant as of January 28, 2015.

In addition to a discussion of the results of operations of Optiv and Accuvant, we are also providing supplemental results of operations of FishNet Security, supplemental pro forma results of operations of the combined companies for the nine months ended September 30, 2016 and 2015 and the year ended December 31, 2015 assuming the FishNet Security Merger, our incurrence of additional indebtedness on May 13, 2015 to finance a dividend payment to our stockholders and this offering and the application of the net proceeds therefrom as described under “Use of Proceeds” had occurred on January 1, 2015, supplemental pro forma results of operations of the combined companies for the year ended December 31, 2014 assuming the Accuvant/Blackstone Transaction, the FishNet Security Merger, our incurrence of additional indebtedness on May 13, 2015 to finance a dividend payment to our stockholders and this offering and the application of the net proceeds therefrom as described under “Use of Proceeds” had occurred on January 1, 2014 and supplemental pro forma results of operations of the combined companies for the year ended December 31, 2013 assuming the Accuvant/Blackstone Transaction and the FishNet Security Merger had occurred on January 1, 2013.

During the nine months ended September 30, 2016, we completed our acquisitions of Advancive, LLC (“Advancive”), Evantix GRC, LLC (“Evantix”) and Adaptive Communications, LLC (“Adaptive”). The acquisitions were not material, individually or in the aggregate.

On April 8, 2016, we completed our acquisition of all the outstanding membership interests of Advancive, a provider of identity and access management (“IAM”) services and solutions, for total cash consideration of approximately $6.2 million. The acquisition of Advancive provides resource capacity for IAM, which is our fastest growing security service practice, and provides an international presence with an office and operations in India. The acquisition further expands our delivery and service expertise and strategic vendor breadth within IAM.

On May 12, 2016, we completed our acquisition of substantially all of the assets of Evantix, a provider of Software as a Service (“SaaS”) application for managing third-party risk which will be part of a new security service offering dedicated to third-party risk for total cash consideration of approximately $1.1 million.

On June 1, 2016, we completed our acquisition of all outstanding membership interests of Adaptive, a New England-based provider of robust and flexible information security solutions for total cash consideration of approximately $31.7 million, as well as an option to purchase up to four shares of our common stock at a price of $500,000 per share (which was exercised in full on July 1, 2016). The acquisition of Adaptive enhances our geographic footprint and brand in the Northeastern part of the United States. The acquisition also expands our sales and sales management resource and brings with it a strong and loyal customer base.

Key Factors Affecting Our Performance

We believe the following trends and factors may have an important impact on our financial performance:

•

Continued growth in the cyber security market: We continue to see growth in the total size of the cyber security industry in the United States and globally. As a market-leading provider of end-to-end cyber security solutions, overall industry growth is a key factor driving our business. As such, our financial results are significantly affected by overall industry growth.

•

Our ability to increase engagements with existing clients: We pride ourselves on maintaining ongoing relationships with our clients. To grow our revenue, it is important that our existing clients purchase additional solutions from us. Sales to our existing client base can take the form of incremental sales of Security Technology and Security Services either to deploy our platform in additional parts of their network or to protect additional threat vectors. Follow-on sales lead to increased revenue over the lifecycle of a client relationship and can significantly increase the return on our sales and marketing investments.

•

Performance of our client engagement team: The number of clients that we add in a given period impacts our longer term revenue. We are focused on attracting new clients. Our growth strategy contemplates continued investments in our sales and marketing personnel. Newly hired client engagement personnel will require several months to establish relationships with clients and prospective clients before contributing to the productivity of our client engagement activities and driving revenue growth.

•

Expansion of our services business mix: Increasingly, our clients are asking us for more complex technology solutions and security operations services. As such, we believe that our success will be based on our ability to tailor specific, innovative solutions to meet the changing needs of our clients. Accordingly, providing those solutions would shift our business mix toward services revenue, which would have the effect of expanding our overall gross margins over time.

Key Business Metrics

We regularly review the following key metrics to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions. We discuss revenue and gross profit below under “—Components of Results of Operations.” Period-on-period revenue growth, EBITDA,

Adjusted EBITDA and total number of clients are discussed immediately below the following table. The following financial metrics are used by management to monitor and analyze the operational performance of our business.


	Pro Forma									Historical Information
										Successor												Predecessor
	Nine Months Ended September 30, 2016^(A)			Nine Months Ended September 30, 2015^(A)(B)			Year Ended December 31, 2015^(A)(B)			Nine Months Ended September 30, 2016			Nine Months Ended September 30, 2015^(C)			Year Ended December 31, 2015^(C)			Period from April 22 to December 31, 2014^(D)			Period from January 1 to April 21, 2014^(E)			Year Ended December 31, 2013^(E)
(Dollars in thousands)	(Unaudited)			Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Operational and Other Data
Financial
Period-on-period revenue growth (%)⁽¹⁾		(4	)%					24	%
Gross margin		37	%		31	%		32	%		37	%		30	%		31	%		29	%		31	%		29	%
EBITDA	$	50,557		$	40,589		$	72,436		$	50,557		$	25,532		$	56,633		$	14,329		$	1,576		$	18,099
Adjusted EBITDA	$	61,178		$	55,028		$	96,385		$	61,178		$	56,062		$	97,478		$	26,298		$	2,088		$	19,443
Operational:
Total number of clients		4,282			4,365			5,000			4,282			4,260			4,917			2,051			1,161			2,241

(A)

(B)	Reflects unaudited pro forma financial and other information giving effect to the FishNet Security Merger and the other transactions as described under “Unaudited Pro Forma Consolidated Financial Information” as if such transactions had occurred as of January 1, 2015.

(C)	Reflects historical financial and other data for Optiv for periods following the Accuvant/Blackstone Transaction, and results of operations of FishNet Security are included from January 28, 2015.

(D)	Reflects financial and other data for Optiv for periods following the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.

(E)	Reflects financial and other data for Optiv for periods prior to the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.

(1)

As described in “—Recent Accounting Pronouncements,” we are currently in the process of evaluating the impact of ASU 2014-09 on our consolidated financial statements. However, the effects of the new standard are currently unknown. We currently account for sales of technology products gross of their associated costs. Our assessment is not complete. As a result, we believe that if we were to change from gross to net, upon adoption such a change would be significant to our financial statements. In such circumstance, we estimate the effect on revenue and cost of sales as follows:


	Adjusted Historical Information
	Successor											Predecessor
(Unaudited)	Nine Months Ended September 30, 2016^(A)			Nine Months Ended September 30, 2015^(A)			Year Ended December 31, 2015^(A)			Period from April 22 to December 31, 2014^(B)		Period from January 1 to April 21, 2014^(C)		Year Ended December 31, 2013^(C)
(Dollars in thousands)
Revenue	$	336,185		$	274,349		$	404,406		$	127,416	$	38,438	$	135,321
Period-on-period revenue growth (%)		23	%		150	%		144	%

(A)	Reflects historical financial and other data for Optiv for periods following the Accuvant/Blackstone Transaction and results of operations of FishNet Security are included from January 28, 2015.

(B)	Reflects financial and other data for Optiv for periods following the Accuvant/Blackstone Transaction and does not reflect the financial results of FishNet Security.

(C)	Reflects financial and other data for Accuvant for periods prior to the Accuvant/Blackstone Transaction and does not reflect the financial results of FishNet Security.

Period-on-period revenue growth (%): We are focused on driving continued revenue growth through increased sales of our Security Technology and Security Services to new and existing clients.

EBITDA and Adjusted EBITDA: We define EBITDA as net income (loss) adjusted for interest, tax, depreciation and amortization of acquired intangibles. We define Adjusted EBITDA as EBITDA adjusted to exclude net foreign currency exchange (gains) losses; equity based compensation; transaction expenses; ERP expenses; integration expenses; and certain other adjustments. In addition, we use a metric we refer to as “Further Adjusted EBITDA,” which we define as Adjusted EBITDA as further adjusted to exclude monitoring, support and service fees to our Sponsors and board of directors fees, in the calculation of certain bonus and incentive payments to management.

Furthermore, we use a metric we refer to as “Covenant Adjusted EBITDA,” which we define as Further Adjusted EBITDA as additionally adjusted to add deferred revenue, synergies and pro forma EBITDA for entities that we have acquired, to evaluate flexibility under certain restrictive covenants. See “—Liquidity and Capital Resources” on pages 92 through 94 for more information.

EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA should not be considered in isolation or as substitutes for other measures of financial performance reported in accordance with GAAP. EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA have limitations as analytical tools, including:

•

EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs or contractual commitments;

•

EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;

•

although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often need to be replaced in the future, and EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA do not reflect any cash requirements for these replacements; and

•

other companies may calculate EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA differently, limiting their usefulness as comparative measures.

We compensate for the inherent limitations associated with using EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA through disclosure of these limitations, presentation of our financial statements in accordance with GAAP and reconciliation of EBITDA, Adjusted EBITDA, Further Adjusted EBITDA and Covenant Adjusted EBITDA to the most directly comparable GAAP measure, net income (loss).

The table below provides a reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA:


	Pro Forma									Historical Information
										Successor											Predecessor
	Nine Months Ended September 30, 2016^(A)			Nine Months Ended September 30, 2015^(A)^(B)			Year Ended December 31, 2015^(A)(B)			Nine Months Ended September 30, 2016		Nine Months Ended September 30, 2015^(C)			Year Ended December 31, 2015^(C)			Period from April 22 to December 31, 2014^(D)			Period from January 1, 2014 to April 21, 2014^(E)			Year Ended December 31, 2013^(E)
(In thousands)	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)		(Unaudited)
Net income (loss)	$	(5,722	)	$	(13,585	)	$	(5,559	)		$(5,722)	$	(21,898	)	$	(14,358	)	$	(111	)	$	1,794		$	6,785
Add (subtract):
Interest expense		37,690			36,639			49,432			37,690		32,546			45,339			4,342			210			1,054
Provision for income tax expense (benefit)		(2,623	)		(7,992	)		(3,962	)		(2,623)		(9,312	)		(5,543	)		2,399			(1,491	)		6,694
Depreciation and amortization		21,212			25,527			32,525			21,212		24,196			31,195			7,699			1,063			3,566

EBITDA		50,557			40,589			72,436			50,557		25,532			56,633			14,329			1,576			18,099

Adjustments:
Net foreign currency exchange (gain) loss		86			157			707			86		157			707			37			183			(32	)
Equity-based compensation⁽¹⁾		1,956			1,276			2,145			1,956		1,276			2,145			467			—			167
Transaction expenses⁽²⁾		1,558			—			—			1,558		16,091			16,889			10,675			—			—
ERP implementation expenses⁽³⁾		144			5,191			5,201			144		5,191			5,201			—			—			—
Integration expenses⁽⁴⁾		6,633			7,018			12,668			6,633		7,018			12,668			—			—			—
Non-capitalizable IPO costs⁽⁵⁾		244			209			2,583			244		209			2,583			—			—			—
Other⁽⁶⁾		—			588			645			—		588			652			790			329			1,209

Total adjustments		10,621			14,439			23,949			10,621		30,530			40,845			11,969			512			1,344

Adjusted EBITDA	$	61,178		$	55,028		$	96,385			$61,178	$	56,062		$	97,478		$	26,298		$	2,088		$	19,443

(A)

(B)	Reflects unaudited pro forma financial and other information after giving effect to the FishNet Security Merger and the other transactions as described under “Unaudited Pro Forma Consolidated Financial Information” as if such transactions had occurred as of January 1, 2015.

(C)	Reflects historical financial and other data for Optiv for periods following the Accuvant/Blackstone Transaction, and results of operations of FishNet Security are included from January 28, 2015.

(D)	Reflects financial and other data for Optiv for periods following the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.

(E)	Reflects financial and other data for Accuvant for periods prior to the Accuvant/Blackstone Transaction, and does not reflect the financial results of FishNet Security.

(1)

(2)

(3)

(4)	Reflects rebranding and integration costs paid to third-party consultants as a result of the FishNet Security Merger. We believe the exclusion of rebranding and integration costs from Adjusted EBITDA is useful to investors as we do not believe that it represents its core business.

(5)	Reflects costs related to IPO readiness activities. We believe the exclusion of costs related to IPO readiness activities from Adjusted EBITDA is useful to investors as this adjustment represents a one-time event that is not indicative of our ongoing core operations.

(6)	Other adjustments include amounts our management believes are not indicative of our ongoing operations for various reasons, including, among others, restructuring costs and severance costs.

Number of clients: We believe that the size of our client base is an indicator of our market penetration and that the number of clients that we transact with within a period is an indicator of the growth of our business. We calculate the number of clients for each period as the total number of separate clients we transacted with during the period.

Quarterly Financial Data

Our quarterly results have fluctuated in the past and we believe they will continue to do so in the future. Certain factors that could affect our quarterly operating results are described in “Risk Factors” included elsewhere in this prospectus. Due to these and other factors, we believe that quarter-to-quarter comparisons of our results of operations are not meaningful indicators of future performance.

The following tables set forth our quarterly results for the Predecessor period from January 1 to April 21, 2014 and the Successor period from April 22 to June 30, 2014, the year ended December 31, 2015 and the nine months ended September 30, 2016:

Fiscal 2016 (through September 30, 2016) and Fiscal 2015


	Successor
	Three Months Ended
(unaudited, in thousands, except per share data)		September 30, 2016		June 30, 2016		March 31, 2016			December 31, 2015		September 30, 2015			June 30, 2015			March 31, 2015

Revenue:
Products	$	139,839	$	124,425	$	107,388		$	203,070	$	150,047		$	155,979		$	140,975
Subscriptions, maintenance and support		45,622		40,313		32,752			49,524		32,702			30,167			20,500
Security services		51,266		52,778		49,372			46,205		43,232			41,278			33,597

Total revenue		236,727		217,516		189,512			298,799		225,981			227,424			195,072

Cost of sales:
Products		114,909		103,774		88,887			168,742		125,554			131,480			117,094
Security services		33,283		32,953		30,556			29,177		28,239			26,834			21,855

Total cost of sales		148,192		136,727		119,443			197,919		153,793			158,314			138,949

Total gross profit		88,535		80,789		70,069			100,880		72,188			69,110			56,123
Operating expenses		74,354		67,608		68,019			76,228		62,855			68,737			64,347
Operating income (loss)		14,181		13,181		2,050			24,652		9,333			373			(8,224	)
Net income (loss)	$	675	$	318	$	(6,715	)	$	7,540	$	(2,339	)	$	(6,605	)	$	(12,954	)
Earnings (loss) per share(1):
Basic	$	274	$	62	$	(2,751	)	$	3,090	$	(964	)	$	(2,724	)	$	(5,797	)
Diluted	$	270	$	61	$	(2,751	)	$	3,047	$	(964	)	$	(2,724	)	$	(5,797	)

(1)	Earnings (loss) per common share calculations for each of the periods were based upon the weighted average number of shares outstanding for each period, and the sum of the periods may not necessarily be equal to the full year earnings (loss) income per common share amount.

Fiscal 2014


	Successor									Predecessor
	Three Months Ended						Period From April 22 to June 30, 2014			Period From April 1 to April 21, 2014			Three Months Ended March 31, 2014
(unaudited, in thousands, except per share data)	December 31, 2014			September 30, 2014			Period From April 22 to June 30, 2014			Period From April 1 to April 21, 2014			Three Months Ended March 31, 2014
Revenue:
Products	$	92,022		$	78,996		$	61,067		$	5,591		$	47,901
Subscriptions, maintenance and support		18,321			9,564			8,882			1,149			8,909
Security services		24,028			17,082			12,535			3,384			15,819

Total revenue		134,371			105,642			82,484			10,124			72,629

Cost of sales:
Products		78,195			65,549			51,337			4,047			40,268
Security services		14,361			11,794			8,489			2,459			10,352

Total cost of sales		92,556			77,343			59,826			6,506			50,620

Total gross profit		41,815			28,299			22,658			3,618			22,009
Operating expenses		33,702			25,865			26,562			4,446			20,513
Operating income (loss)		8,113			2,434			(3,904	)		(828	)		1,496
Net income (loss)	$	(322	)	$	(35	)	$	246		$	835		$	959
Earnings (loss) per share(1):
Basic	$	(179	)	$	(19	)	$	138			N/A			N/A
Diluted	$	(179	)	$	(19	)	$	138			N/A			N/A

(1)

Earnings (loss) per common share calculations for each of the periods were based upon the weighted average number of shares outstanding for each period, and the sum of the periods may not necessarily be equal to the full year earnings (loss) income per common share amount. Net income for the predecessor period from January 1 to April 21, 2014 was entirely allocable to predecessor preferred units. Additionally, due to the impact of the Accuvant/Blackstone Transaction, our capital structure for the predecessor and successor periods is not comparable. As a result, the presentation of earnings (loss) per share for the periods prior to such transaction is not meaningful and only earnings per share for periods subsequent to the Accuvant/Blackstone Transaction are presented herein.

Components of Results of Operations

Revenue

Our business focuses on providing cyber security solutions, which includes a combination of Security Technology and Security Services. We generate revenue by providing security consulting and managed security services and from the sale of third-party hardware products, shipping and handling fees, software licenses and support and maintenance.

For Security Technology revenue, we recognize revenue and the associated costs of goods sold for the sales of third-party hardware products and software licenses on a gross basis since we serve as the primary obligor, set the price to our clients, carry the credit risks and work with our clients in choosing the right vendor. We report revenue from the sales of software maintenance, support and subscription services net of fulfillment costs as we are not the primary obligor in these transactions.

For Security Services revenue, we recognize revenue from consulting services and managing and monitoring components of our clients’ security infrastructure. Contracts for consulting services have different terms based on the scope, deliverables and complexity of the engagement. Fees for these contracts may be in the form of time-and-materials or fixed-price. Revenue for consulting services is recognized as work is performed and when amounts are earned. For our managed security services, we generally enter into annual service agreements with clients that are billed in advance. Associated expenses incurred and billed to clients such as travel are presented as revenue.

Cost of Sales

Our cost of sales is comprised of Security Technology cost of sales and Security Services cost of sales. Cost of sales excludes depreciation and amortization of acquired intangible assets and does not include any allocation of overhead costs.

Security Technology cost of sales includes product costs, outbound and inbound freight costs, vendor rebates and supplier discounts.

Security Services cost of sales includes direct costs incurred associated with delivering services, such as salaries, wages, bonuses, employment-related expenses, traveling expenses and subcontract fees.

Selling, General and Administrative Expenses

Selling expenses include salaries, bonuses and benefits for our client engagement team, the expense of travel, entertainment and training for such personnel and various sales and promotional programs.

General and administrative expenses include salaries, bonuses, benefits and stock-based compensation expense for our finance, human resources, marketing, IT and legal employees, as well as professional fees for legal and accounting services, expense of travel, entertainment and training, expense of communication, the cost of supplies, software and equipment, online marketing, product marketing and other brand-building activities, such as advertising, trade shows and expositions. We receive offsets through vendor market development programs. We have recently incurred, and expect to continue to incur, additional expenses as we grow our operations and transition to operating as a public company, including higher legal, corporate insurance, accounting and auditing expenses, and the additional costs of enhancing and maintaining our internal control environment through the adoption of new corporate policies. We also expect that general and administrative expenses will continue to increase in absolute dollars as we expand our operations.

Depreciation of property and equipment is included as part of selling, general and administrative expenses. Property and equipment are initially recorded at cost or at estimated fair value if acquired through a business combination and are depreciated over the useful life of each asset using the straight-line method.

Amortization of Acquired Intangibles Expense

Intangible assets acquired in business combinations are recorded at fair value, while intangible assets acquired in the normal course of business are recorded at their cost. Intangible assets are amortized over their estimated useful lives, with the exception of indefinite lived intangible assets, which are not amortized.

Other Expense

Other expense consists primarily of gain (loss) on disposal of assets, extraordinary expenses such as transaction expenses, board of director fees and other miscellaneous expenses that do not meet the classification criteria of other components of results of operations.

Other Income

Other income consists primarily of interest income earned on cash equivalents and employee stock loans.

Interest Expense

Interest expense is typically recognized in the period incurred at the applicable interest rate in effect. For increasing-rate debt, we determine the periodic interest cost using the effective interest method over the estimated outstanding term of the debt. Interest expense is inclusive of loss on extinguishment of debt.

Net Foreign Currency Exchange Gain (Loss)

Net foreign currency exchange gain (loss) consists of unrealized and realized gains and losses related to changes in foreign currency exchange rates.

Income Tax Provision

Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the period in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax (benefit) expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

Results of Operations

As a result of the Accuvant/Blackstone Transaction, a new basis of accounting was created on April 22, 2014. We are required to present separately our operating results for the Predecessor period ended April 21, 2014 and the Successor period commencing on April 22, 2014. GAAP does not allow for such combination of financial results for the Predecessor period and the Successor period; however, we believe that a comparative discussion of the combined results provides information that is useful in evaluating our financial performance. For comparison purposes, the discussion of results of operations below is based on the mathematical combination of the 2014 successor (April 22, 2014 through December 31, 2014) period and the 2014 predecessor (January 1, 2014 through April 21, 2014) period compared to the predecessor year ended December 31, 2013. Although the Accuvant/Blackstone Transaction has not affected our operations, we have experienced increased amortization of acquired intangibles expense and increased interest expense resulting from debt financing arrangements in the Successor period. The combined information is the result of merely adding the two columns and does not include any pro forma assumptions or adjustments. We believe the Predecessor/Successor split of our results for the year ended December 31, 2014 would make it difficult for an investor to compare historical and future results. Combining the Predecessor and Successor results puts our operational performance into a meaningful format for comparative purposes.

Additionally, as a result of the FishNet Security Merger on January 28, 2015, FishNet Security’s results of operations from January 28 to December 31, 2015 were included in Optiv’s results of operations for the year ended December 31, 2015. Therefore, Optiv’s results of operations for the combined periods from January 1, 2014 to April 21, 2014 and April 22, 2014 to December 31, 2014 are not comparable with the year ended December 31, 2015.

We have presented supplemental unaudited pro forma results of operations for the nine months ended September 30, 2016 and September 30, 2015 and the years ended December 31, 2015, 2014 and 2013. Because the Accuvant/Blackstone Transaction occurred on April 22, 2014 and the FishNet Security Merger occurred on January 28, 2015, we believe this pro forma information aids in the comparison between the historical periods presented. Comparability of the historical periods is impacted by the April 22, 2014 Accuvant/Blackstone Transaction, the January 28, 2015 FishNet Security Merger and the May 13, 2015 dividend payment to stockholders. To aid in the comparison, we have presented pro forma numbers next to the corresponding historical information.

Optiv Comparison of Historical Nine Months Ended September 30, 2016 (unaudited) and September 30, 2015 (unaudited) and Optiv Comparison of Pro Forma Nine Months Ended September 30, 2016 (unaudited) and Pro Forma Nine Months Ended September 30, 2015 (unaudited)

The following table sets forth the historical and pro forma statements of operations for Optiv for the nine months ended September 30, 2016 and September 30, 2015.

For the nine months ended September 30, 2015, the pro forma information differs from the historical information as it gives effect to the FishNet Security Merger as if it had occurred on January 1, 2015. The pro forma information does not purport to represent what our results of operations would have been had the FishNet Security

Merger occurred at the beginning of the comparative nine months ended September 30, 2015, nor does it purport to project our results of operations or financial condition for any future period:


	Pro Forma															Historical Information
																Successor
(Dollars in thousands)	Nine Months Ended September 30, 2016^(A)						Nine Months Ended September 30, 2015^(A)^(B)						% Change			Nine Months Ended September 30, 2016						Nine Months Ended September 30, 2015^(C)						% Change
	(Unaudited)						(Unaudited)									(Unaudited)						(Unaudited)
				% of Total Revenue						% of Total Revenue									% of Total Revenue						% of Total Revenue
Revenue:
Products	$	371,652			58	%	$	459,808			68	%		(19	%)	$	371,652			58	%	$	447,001			69	%		(17	%)
Subscriptions, maintenance and support		118,687			18	%		85,286			13	%		39	%		118,687			18	%		83,369			13	%		42	%
Security services		153,416			24	%		127,971			19	%		20	%		153,416			24	%		118,107			18	%		30	%

Total revenue		643,755			100	%		673,065			100	%		(4	%)		643,755			100	%		648,477			100	%		(1	%)

Costs of sales:
Products		307,570			48	%		385,128			57	%		(20	%)		307,570			48	%		374,128			58	%		(18	%)
Security services		96,792			15	%		80,919			12	%		20	%		96,792			15	%		76,928			12	%		26	%

Total costs of sales		404,362			63	%		466,047			69	%		(13	%)		404,362			63	%		451,056			70	%		(10	%)

Gross profit		239,393			37	%		207,018			31	%		16	%		239,393			37	%		197,421			30	%		21	%
Operating expenses:
Selling, general and administrative expenses		183,926			29	%		158,936			24	%		16	%		183,926			29	%		151,831			23	%		21	%
Amortization of acquired intangibles		16,075			2	%		20,938			3	%		(23	%)		16,075			2	%		19,939			3	%		(19	%)
Other expense		9,980			2	%		11,936			2	%		(16	%)		9,980			2	%		24,169			4	%		(59	%)

Total operating expenses		209,981			33	%		191,810			28	%		9	%		209,981			33	%		195,939			30	%		7	%

Operating income		29,412			5	%		15,208			2	%		93	%		29,412			5	%		1,482			0	%		1,885	%
Non-operating income (expense):
Other income		19			0	%		11			0	%		73	%		19			0	%		11			0	%		73	%
Interest expense		(37,690	)		(6	%)		(36,639	)		(5	%)		3	%		(37,690	)		(6	%)		(32,546	)		(5	%)		16	%
Net foreign currency exchange gain (loss)		(86	)		0	%		(157	)		0	%		(45	%)		(86	)		0	%		(157	)		0	%		(45	%)

Income before income tax expense		(8,345	)		(1	%)		(21,577	)		(3	%)		(61	%)		(8,345	)		(1	%)		(31,210	)		(5	%)		(73	%)

Income tax benefit (expense)		2,623			0	%		7,992			1	%		(67	%)		2,623			0	%		9,312			1	%		(72	%)

Net income (loss)	$	(5,722	)		(1	%)	$	(13,585	)		(2	%)		(58	%)	$	(5,722	)		(1	%)	$	(21,898	)		(3	%)		(74	%)

(A)

(B)	Reflects unaudited pro forma financial and other information giving effect to the FishNet Security Merger and the other transactions as described under “Unaudited Pro Forma Consolidated Financial Information” as if such transactions had occurred as of January 1, 2015.

(C)	Reflects historical financial and other data for Optiv for periods following the Accuvant/Blackstone Transaction and results of operations of FishNet Security are included from January 28, 2015.

Revenue

Historical. Total revenue decreased $4.7 million to $643.8 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. For the nine months ended September 30, 2016, we experienced a mix shift from products (recognized on a gross basis) to subscription services, maintenance and support (recognized on a net basis) which resulted in a decrease in total revenue. Revenue from products decreased as a percentage of total revenue from 69% to 58% for the nine months ended September 30, 2015 and 2016, respectively. However, revenue from subscription services, maintenance and support increased as a percentage of total revenue from 13% to 18% for the nine months ended September 30, 2015 and 2016, respectively. This was supported by (i) an increase in total gross billings of $166.8 million to $1,381.9 million for

the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015 and (ii) an increase in subscription services, maintenance and support gross margin by five basis points.

Pro Forma. On a pro forma basis, total revenue decreased $29.3 million to $643.8 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. The decrease in total revenue was primarily due to the change in product mix from products to subscription services, maintenance and support. Revenue from products decreased as a percentage of total revenue from 68% to 58% for the nine months ended September 30, 2015 and 2016, respectively. However, revenue from subscription services, maintenance and support increased as a percentage of revenue from 13% to 18% of total revenue for the nine months ended September 30, 2015 and 2016, respectively. This was supported by (i) an increase in total gross billings of $129.5 million to $1,381.9 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015 and (ii) an increase in subscription services, maintenance and support gross margin by five basis points.

Cost of Sales

Historical. Total cost of sales decreased $46.7 million to $404.4 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. The decrease was primarily due to the change in product mix from products to subscription services, maintenance and support. Cost of sales was approximately 63% and 70% of revenue for the nine months ended September 30, 2016 and 2015, respectively. The cost of sales, on a billed basis, as a percentage of gross revenue billings was 83% and 84% for the nine months ended September 30, 2016 and 2015, respectively.

Pro Forma. On a pro forma basis, total cost of sales decreased $61.7 million to $404.4 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. The decrease in cost of sales was in line with the decrease in total revenue due to the change in product mix from hardware and software to subscription services, maintenance and support.

Selling, General and Administrative Expenses

Historical. Selling, general and administrative expenses increased $32.1 million to $183.9 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. The increase was primarily due to an increase in our sales and administrative staff by 22% from the nine months ended September 30, 2015 to support our organic growth, resulting in an additional $20.3 million in compensation expense in the nine months ended September 30, 2016 and additional costs of approximately $5.4 million, including training, recruitment fees, communication expenses and travel expenses. Selling, general and administrative expenses increased by 6% as a percentage of revenue to 29% in the nine months ended September 30, 2016, compared to the nine months ended September 30, 2015, and 13% and 12% as a percentage of gross billings for the nine months ended September 30, 2016 and 2015, respectively.

Pro Forma. On a pro forma basis, selling, general and administrative expenses increased $25.0 million to $183.9 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. The increase was primarily a result of our continued organic growth, resulting in additional headcount in the sales and administration area supporting our core operating activities. The increased headcount resulted in increases in salaries, bonuses, commission, training, recruitment fees, communication expenses and travel expenses.

Amortization of Acquired Intangibles

Historical. Amortization of acquired intangibles decreased $3.9 million to $16.1 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. As part of the FishNet Security Merger and our subsequent rebranding to Optiv, we accelerated the useful life of the Accuvant trade name and recognized $4.6 million of amortization expense for the nine months ended September 30, 2015.

Amortization of acquired intangibles was 2% of revenue for the nine months ended September 30, 2016 and 3% of revenue for the nine months ended September 30, 2015 as a result of the additional intangibles recognized as part of the FishNet Security Merger. Amortization of acquired intangibles marginally decreased from 2% as a percentage of gross billings for the nine months ended September 30, 2015 to 1% as a percentage of gross billings for the nine months ended September 30, 2016.

Pro Forma. On a pro forma basis, amortization of acquired intangibles decreased $4.9 million to $16.1 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. The decrease was primarily due to the acceleration of the useful life of the Accuvant trade name and recognized $4.6 million of amortization expense for the nine months ended September 30, 2015. During the nine months ended September 30, 2016, we wrote off the carrying amount and accumulated amortization for the trade name as it had no net book value and was deemed no longer in use.

Other Expense

Historical. Other expense decreased $14.2 million to $10.0 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. The decrease in other expense was primarily due to the following incurred during the nine months ended September 30, 2015: (i) $10.7 million in transaction costs relating to the FishNet Security Merger; (ii) $5.6 million in integration costs associated with the FishNet Security Merger; (iii) $5.2 million in systems implementation expenses; and (iv) $2.1 million in the Optiv re-branding. There were $6.6 million in integration costs and $1.6 million in transaction expenses incurred during the nine months ended September 30, 2016 associated with the FishNet Security Merger. Other expense decreased from 4% of revenue for the nine months ended September 30, 2015 to 2% of revenue for the nine months ended September 30, 2016 as the FishNet Security Merger was a non-recurring event.

Pro Forma. On a pro forma basis, other expense decreased $2.0 million to $10.0 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. The decrease was primarily due to the $5.2 million in systems implementation expenses and the $5.6 million in integration costs during the nine months ended September 30, 2015, as compared to $6.6 million in integration expenses and $1.6 million in transaction expenses during the nine months ended September 30, 2016.

Interest Expense

Historical. Interest expense increased $5.1 million to $37.7 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. The increase was a result of the additional debt of $410.0 million that we incurred on January 28, 2015 to finance the FishNet Security Merger and debt of $195.0 million that we incurred on May 13, 2015 to partially finance the dividend paid on that date. As of September 30, 2016, we had $633.2 million of outstanding indebtedness as compared to $612.4 million of indebtedness as of September 30, 2015. Interest expense increased from 5% of revenue for the nine months ended September 30, 2015 to 6% of revenue for the nine months ended September 30, 2016 as a result of the additional debt that we undertook in the year ended December 31, 2015, and 3% as a percentage of gross billings for each of the nine months ended September 30, 2016 and 2015.

Pro Forma. On a pro forma basis, interest expense increased $1.1 million to $37.7 million for nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015.

Income Tax Benefit (Expense)

Historical. Our effective tax rate was 31% and 30% for the nine months ended September 30, 2016 and 2015, respectively. The increase was primarily due to nondeductible transaction costs incurred during the nine months ended September 30, 2015 relative to the amount of loss before income tax benefit. We had no liabilities for uncertain tax positions as of September 30, 2016.

Pro Forma. On a pro forma basis, our effective tax rates were 31% and 37% for the nine months ended September 30, 2016 and 2015, respectively. Pro forma effective tax rates differ from historical tax rates for the same period because the transactions adjusted for pro forma purposes have lower effective tax rates than the historical financials.

Segments


	Pro Forma													Historical Information
														Successor
(Dollars in thousands)	Nine Months Ended September 30, 2016^(A)					Nine Months Ended September 30, 2015^(A)^(B)					% Change			Nine Months Ended September 30, 2016					Nine Months Ended September 30, 2015^(C)					% Change
	(Unaudited)					(Unaudited)								(Unaudited)					(Unaudited)
			% of Revenue					% of Revenue								% of Revenue					% of Revenue
Security Technology:
Revenue	$	490,339				$	545,094					(10	%)	$	490,339				$	530,370					(8	%)
Segment gross profit		182,769		37	%		159,966		29	%		14	%		182,769		37	%		156,242		29	%		17	%
Segment profit⁽¹⁾		182,769		37	%		159,966		29	%		14	%		182,769		37	%		156,242		29	%		17	%
Security Services:
Revenue		153,416					127,971					20	%		153,416					118,107					30	%
Segment gross profit		56,624		37	%		47,052		37	%		20	%		56,624		37	%		41,179		35	%		38	%
Segment profit⁽¹⁾		41,281		27	%		32,519		25	%		27	%		41,281		27	%		30,552		26	%		35	%

(A)

(B)	Reflects unaudited pro forma financial and other information giving effect to the FishNet Security Merger and the other transactions as described under “Unaudited Pro Forma Consolidated Financial Information” as if such transactions had occurred as of January 1, 2015.

(C)	Reflects historical financial and other data for Optiv for periods following the Accuvant/Blackstone Transaction, and results of operations of FishNet Security are included from January 28, 2015.

(1)

We evaluate the performance of our reportable segments using “segment profit” which includes general and administrative expenses that are directly related to the reportable segments. For reconciliations of segment profit to net income, see note 12 to our audited financial statements and note 11 to our unaudited financial statements, each included elsewhere in this prospectus.

Security Technology

Historical Revenue. Revenue for our security technology segment decreased $40.0 million to $490.3 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. For the nine months ended September 30, 2016, a change in product mix from products to subscription services, maintenance and support resulted in a decrease in Security Technology revenue. Revenue from products decreased as a percentage of total revenue from 69%

Optiv Inc. S-1