237.5 billion, the largest merger of the year has been born

A wealthy individual arrogantly presented a $23 billion acquisition contract, and the young man shouted back without hesitation, "This amount is nothing but an insult to me! Get lost, I will prove my worth sooner or later." With that, he tore the contract to shreds.

Six months later, the wealthy individual returned to the young man's office, respectfully presenting a new contract and sincerely saying, "Last time I was inconsiderate, this new offer is $32 billion, are you satisfied this time?"

This dramatic plot twist truly happened in the real world.

In July 2024, Google made a record-breaking offer of $23 billion (approximately RMB 167 billion) to acquire the cybersecurity company Wiz, but was met with rejection from Wiz's management team. Wiz's founder, Assaf Rappaport, stated in an employee memo that Google's offer was "such humbling."

On March 19, 2025, Google announced that they had reached a new acquisition agreement with Wiz, and this time the offer had skyrocketed to $32 billion (approximately RMB 237.5 billion), essentially locking in one of the largest mergers and acquisitions of the year.

The Arrogant Young Man

Wiz's rejection of Google's initial offer can be attributed to two main reasons.

First, Wiz had already put an IPO on the agenda.

At that time, their annual recurring revenue had surpassed $350 million, making them one of the fastest-growing startups in the global software sector, and they were making significant strides toward the milestone of $1 billion in annual revenue. Analysts estimated that if the IPO went smoothly, Wiz's overall market value could easily exceed $22 billion, making it unnecessary to sell the company for a "so-so" offer.

Second, Wiz was a classic case of "strong core technology, truly needed in the era."

Wiz's founder, Assaf Rappaport, is a "well-rooted cybersecurity expert" who served in the mysterious Israeli 8200 intelligence unit during his youth. In 2012, he ventured into entrepreneurship with this unique background, founding his first cybersecurity company, Adallom. Adallom's product positioning was quite innovative at the time, as they firmly believed that the security risks of SaaS software did not stem from the software itself, but rather from user habits.

In 2013, Adallom gained fame for discovering and reporting a token hijacking vulnerability (CVE-2013-5054) in Microsoft's flagship product, Office 365. Their unique insights also garnered recognition from the capital markets, securing multiple rounds of investment from top VCs like Sequoia and Index. In 2015, Microsoft acquired Adallom for $320 million, allowing Assaf Rappaport to cash out successfully and become the head of Microsoft's cloud security department, providing him with a broader platform to showcase his technology Founded in 2020, Wiz is such a comprehensive achievement. The "little mustaches" who co-founded Adallom and joined Microsoft together that year designed a product again to help enterprises more conveniently and quickly detect potential abnormal behaviors and analyze the risks that these abnormal behaviors may lead to.

The rapid development of Wiz also proves that Assaf Rappaport's team indeed possesses "one-of-a-kind" capabilities in the industry. In August 2022, Wiz announced that they became the fastest startup in history to reach $100 million in annual recurring revenue, taking only 18 months. In February 2024, they announced that their annual recurring revenue surpassed $350 million, and if only counting the Fortune magazine's Global 100 list, 45% of the giant companies have already become their clients.

When Google initiated its first acquisition offer, Wiz's value became even more apparent, as the era of artificial intelligence had arrived. All application products in the AI era rely on vast amounts of data stored in cloud servers, and data security has thus been elevated to an unprecedented height. Wiz had long recognized this, and in the past two years, they have not only been refining their product capabilities but also attempting to arm themselves through acquisitions. For example, in 2024, they acquired cloud detection and response (CDR) technology developer Gem Security and cloud-native platform Raftt.

So, although after rejecting Google's first acquisition offer, some analysts mocked, "Wiz is blinded by its own arrogance"—if you were Assaf Rappaport, would you be willing to sell the company just when it was on the brink of an IPO?

A Feast for VCs

So why did Wiz accept Google's second acquisition offer? A reasonable explanation is that the U.S. stock market IPO has not been smooth for over a year, and the market is currently in a period of severe turbulence, with a stable recovery seemingly far off. In this case, since Google raised the offer by nearly $10 billion, it might be better to "borrow the slope to get off the donkey."

There is also a conspiracy theory explanation that Google never expected the first offer to succeed. The initial $23 billion offer was more like a public inquiry, testing Wiz's team's ambitions on one hand and conveying the message that Wiz "is considering being acquired" on the other, enticing other potential bidders to try to make offers—once Wiz had a comprehensive insight into the market temperature and Google fully understood the stakes of other competitors, this deal could naturally be completed.

Regardless of the explanation, everything has now been settled. Google acquired Wiz for $32 billion, setting a new record for their largest acquisition. Previously, their biggest acquisition occurred in 2012 when they bought the ailing Motorola for $12.5 billion. The memories of that Motorola acquisition were quite poor, as when they sold it in 2014, its overall valuation had dropped to only $2.5 billion, which can be elaborated on later For investors in Wiz, the $32 billion price tag is enough for them to make a substantial profit.

Since its establishment, Wiz has completed a total of 5 rounds of financing, raising a cumulative total of $1.9 billion. Investors include well-known VCs such as Sequoia, Index, Insight Partners, Lightspeed Venture Partners, A16z, as well as Silicon Valley star investors like Howard Schultz. The most recent financing occurred in May 2024, during which Wiz's overall valuation was $12 billion.

In absolute terms, Sequoia and Index, as staunch supporters of Wiz, have reaped the most rewards. According to calculations, after the acquisition deal is completed, Sequoia will profit at least $3 billion, equivalent to 25 times their investment amount. Index Ventures currently holds a 12% stake, and once the sale is completed, they expect to earn over $3.8 billion in returns.

In terms of multiples, the biggest gainers are from an Israeli venture capital firm, Cyberstarts. Cyberstarts' first investment in Wiz occurred in February 2020, when Wiz completed a seed round financing totaling $54 million, with Cyberstarts contributing $6.4 million. They later increased their investment, and according to an insider, they currently hold a 4.1% stake, which will yield them $1.3 billion in returns. Additionally, Cyberstarts previously sold $120 million worth of Wiz shares, meaning they have made a total profit of over $1.4 billion from the Wiz project, with a return multiple of 222 times.

Such exciting numbers prompted Shai Goldman, a partner at Next Wave NY, to express on social media: "Cyberstarts has created one of the highest return cases in venture capital history... As an LP, choosing Fund 1 (Cyberstarts' first fund) as an investment option has indeed brought surprises!"

Of course, this can also be linked to a previous piece of news. That is, the equity investment return case created through mergers and acquisitions that has occurred in the cybersecurity field this year:

At the end of February, cybersecurity company SailPoint completed its IPO on NASDAQ at a price of $23 per share. Based on the stock price, SailPoint's market capitalization will exceed $12.8 billion, while the company's major shareholder, American private equity firm Thoma Bravo, had an acquisition price of about $6.9 billion. Further calculations show that when SailPoint successfully completes its IPO, Thoma Bravo's return will be at least around $4 billion to $5 billion (approximately RMB 29 billion to 36.2 billion) From this perspective, in the current global trend of "strengthening the supply chain" and "independent intellectual property," we can fully expect to see a continuous emergence of phenomenal transactions in the field of "mergers and acquisitions" by 2025. This is a positive sign for current primary market investors and entrepreneurs.

Author of this article: Pu Fan, Source: Touzhong.com, Original Title: "237.5 Billion, The Largest Merger and Acquisition of the Year Has Emerged"

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