Change is a constant, but in M&A, the target company is always going to be the product. AI is already influencing the pace, valuation, and strategies in mergers and acquisitions, and we keep looking at the core of deal dynamics.

So: why do cybersecurity companies command seemingly illogical valuations at such low revenues?

The answer lies in implied value - what an acquirer believes they will be able to do with you - and what your contribution margin is going to be. That means how you impact their sales, R&D efforts, and ability to go in and quickly dominate a space. 

In this episode, Sophia Tupolev-Luz and Zeevi Michel speak with cybersecurity investor Shay Michel of Merlin Ventures, who shares his experience as a founder, investor, and advisor on all sides of the M&A table. Shay’s uncommon product perspective shows us how large tech players approach acquisitions, and how founders should think about their company's "endgame" from day one.

In this episode, we cover:

• The counterintuitive valuations in cybersecurity.
• Strategic motives behind acquisitions by large tech firms
• Understanding implied value and contribution margins
• AI influence on M&A's pace, valuation, and strategies
• The importance of deep technological moats and expertise
• Impact of U.S. regulatory standards on market entry, risk, and M&A
• Strategies for founders to align with potential acquirers from day one.

About:

Israel’s tech M&A show delivers unfiltered conversations with key players from the startup lifecycle. This is a podcast for startups about the path to mergers and acquisitions—and their aftermath. We’re here to go behind the scenes to look at how transactions go terribly wrong or terrifically right.

Our goal:

 To give founders new perspectives from the buy-side, sell-side, and investors—so they can better plan for their own endgame.

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Transcript file

Produced by: Sophia Tupolev-Luz

Video and sound editing by: Yair Walden

Location: Google for Startups Campus Studio, Tel Aviv