Last week, Google experienced both good and bad news. The good news was the success of its cloud division, generating over $10 billion in revenue for the first time, thanks to Google Workplace and Google Cloud services. This achievement overshadowed the disappointment of missing out on its second major acquisition opportunity in less than a month.
The first missed acquisition involved HubSpot, a CRM and marketing software company based in Boston, which was rumored to be a target for Google. However, after months of speculation, the deal fell through, leading Google to shift its focus to Wiz, a cloud security startup valued at an impressive $12 billion.
Despite rumors of a lucrative $23 billion acquisition offer from Google, Wiz’s CEO and co-founders decided to decline, expressing their confidence in the company’s potential for future growth. This decision raised questions about the reasons behind the failed deal, with industry analysts speculating on various scenarios.
One possible explanation for the deal’s breakdown was Wiz’s desire to explore other options before committing to an acquisition. Additionally, Google’s due diligence might have uncovered issues that led to the deal’s halt or the proposed price was lower than rumored.
Regardless of the specifics, experts suggest that Google needs to revamp its M&A strategies to align with its scale and financial capabilities. The regulatory landscape and the trend of tech companies approaching acquisitions cautiously could have also influenced the decision-making process.
Wiz’s rapid growth and potential for increased valuation as an independent entity were key factors in their decision to reject Google’s offer. The company’s ambitious goals, including reaching $1 billion in annual recurring revenue and pursuing an IPO, further solidified their choice to remain independent.
Founded in early 2020, Wiz has demonstrated remarkable growth in a short period, attracting significant funding and achieving impressive revenue milestones. The company’s success story reflects its founders’ expertise in the security sector and their ability to capitalize on market opportunities.
Although the failed acquisition could have accelerated Google’s growth in the cloud sector, the company continues to face challenges in sealing major deals. Despite a strong quarter and substantial revenue figures, Google’s M&A performance remains a topic of discussion among industry observers.
Marina Temkin and Ingrid Lunden also contributed to this post.
