Google’s The acquisition of cybersecurity startup WIZ could be a turning point in the uncertain IPO market and the tragic merger and acquisition environment that will tragically result from slowing trading activity.
The search giant announced Tuesday that it plans to buy the Israeli cybersecurity startup with its biggest acquisition for $32 billion. The deal comes months after the initial $23 billion offer collapsed, with Wiz CEO Assaf Rappaport promoting plans for the first public offering.
Although contract activities have been slower than their heyday in 2021, their appetite has begun to pick up.
Sail Points It was unveiled in February, when it sells Nvidia’s AI processors, and in a filing Thursday, CoreWeave said it plans to raise up to $2.7 billion in its expected IPO this week. Ticket vendor StubHub applied for the IPO on Friday.
Wiz’s blockbuster deal could indicate the opening of Floodgates in the IPO and M&A market.
Cybersecurity companies are especially poised to win as they look for ways to protect their highly profitable business models. CB Insights on Tuesday said cybersecurity solutions were one of the biggest acquisition target areas of 2025.
“We can provide a more complete offering to secure workloads in the cloud. That’s the core, and the grounds behind it (WIZ) deal,” says Merritt Maxim, Vice President and Research Director at Forester.
AI drive demand for more cybersecurity
The surge in artificial intelligence and the move to the cloud have amplified the need for cybersecurity solutions.
Since Openai launched CHATGPT in late 2022, more skilled hacking schemes have accelerated, with cutting-edge solutions driving the need to dodge attackers. This has made cybersecurity an important target area for businesses seeking to protect their business models.
“Hacking and phishing can effectively crash your business,” says Barlow, who focuses on private equity M&A. “It’s a fundamental business of operation, so cybersecurity has been a resilient area for quite some time.”
The Megacap Technology giant has not moved away from cybersecurity investments, but AI tail winds are forced to strengthen their products for businesses. Google’s Wiz deals could force rivals Amazon To make its own acquisition, Maxim said. Potential targets include Startups Aqua Security, Orca Security, and Sysdig.
“The Google-Wiz partnership offers more powerful features than AWS in some areas,” Maxim said. “AWS could target acquisitions and bring the solution closer to Google.”
What’s next for the IPO market?
While the With’s Mammoth acquisition could undermine the recent sentiment of cybersecurity startups with IPO aspirations, experts told CNBC they are expecting a pick up later this year.
One of those candidates is the proof point for malware and phishing software makers who told CNBC in October it was exploring IPOs in the next 12-18 months. The company went private in 2021 with a $12.3 billion acquisition by private equity firm Thoma Bravo.
Maxim of Forrester said Proofpoint and Illumino are ripe for IPOs for the coming months. Ilumio, a data center and cloud security provider, was a member of CNBC’s Disruptor 50 list in 2017 and 2018.
Also, Netskope, which offers cloud security, is another company that is closely monitored for IPOs, said Brianne Lynch, head of market insights at Equityzen. Netskope told the Wall Street Journal last year that it plans an IPO in 2025. The company could begin to feel pressure from early investors hunting liquidity 13 years after its establishment, Lynch said.
Snyk, a cybersecurity startup founded about 10 years ago, has also hinted at a public call for next year. The company was last valued at $7.4 billion, with CEO Peter McKay saying in a post last year that SNYK has surpassed $300 million in annual recurring revenue.
The big question is whether this is the moment of crossing boundaries for the companies that have decided to make it public, or whether market volatility will force companies to drive away the cans again, Lynch said.
