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Security vendor Sourcefire, which went public last month, said tougher corporate governance regulations are making it more difficult and more expensive to float.

Sourcefire represents a rare example of a security firm staging an IPO, a feat only a handful of firms have succeeded in doing in the last five years.

A more frequent exit strategy for an enterprising security start-up is to get bought out by one of the big boys. Sourcefire chief operating officer Tom McDonough said the bar to going public has been raised very high.

"For three years after the dotcom bubble burst in 2000 it was like nuclear winter for hi-tech investors. Now we have regulations like Sarbanes-Oxley that make it very expensive to go public. We had to take on extra staff just to cope with the paperwork.

"Only exceptional firms in the security space will go public," he added.

Sourcefire was founded by Martin Roesch, the creator of the open source Snort intrusion detection system. The firm's floatation last month was 16 times oversubscribed and raised $86m. Going public left Sourcefire with $115m in the bank. McDonough said Sourcefire was looking to spend the cash by expanding into "adjacent markets" by acquisition.

The security firm, whose planned merger with Check Point in 2005 fell foul of US government security concerns over the implications of using technology controlled by an Israeli firm to protect sensitive systems, is revamping its product lineup around a strategy dubbed Enterprise Threat Management. The strategy combines intrusion prevention, network behaviour analysis, and network access control and vulnerability assessment. ®

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