Wizz backs out of Google acquisition bid: Here's what analysts say

Wizz abandoned a big takeover bid from Google to pursue an IPO

Analysts said the decision could be due to multi-cloud product positioning and regulatory concerns.

Analysts say Wizz's investors are likely to keep the company growing at a healthy clip as it continues to pursue its dreams.

“Bold,” “interesting,” “smart” are some of the words analysts used to describe Wiz's decision to abandon a massive $23 billion acquisition offer from Google to chase dreams of an IPO.

A proposal from Google would be a big boost for the company, which was valued at $12 billion after a $1 billion funding round in May. In February, Wizz announced it had reached $350 million in annual recurring revenue and CEO Assaf Rapaport suggested the company was considering going public.

Wyz did not respond to a request for comment, but in a memo to staff published by TechCrunch, Rapaport said Google's proposal was offensive but insisted the company would stay on track.

“In conclusion, our next milestones are $1B ARR and an IPO,” he wrote. “The market validation we've experienced with this news further reinforces our goal of building a platform that both security and development teams love.”

Rapaport didn't go into detail about why he rejected Google in his memo, but NextCurve founder Leonard Lee told Fierce it could have to do with how Wizz is positioning its product.

“Given the nature of Wiz’s product, which enables enterprises to secure their portfolio of multi-cloud and DevSecOps pipeline builders and managers, I suspect Wiz wanted to maintain a CSP agnostic/neutral positioning, as that is key to the company’s product positioning,” he said. Still, the refusal was a bold move.

Lee added, “Wiz's management appears to recognize the growing opportunity to combat the rapidly expanding cybercrime economy and the expanding risks and threats to business and consumer security, privacy and trust. In some ways, their recognition of the market opportunity outweighs any higher offers from companies like Alphabet.”

Avidthink founder Roy Chua added that Wizz may have simply decided it wasn't worth revealing its inside secrets during the due diligence process if it thought regulators might ultimately halt the deal.

Will Townsend of Moor Insights and Strategies added that with cloud security in the spotlight, Wiz's management may have thought an IPO would be more valuable than a sale in the long term.

That's fine, but how big a risk is it for Wiz to pursue a public debut?

According to Statista data, IPO numbers will continue to decline in 2023, dropping to just 154 from 480 in 2020, after a peak of more than 1,000 in 2021. Even before the COVID-19 boom, the number of IPOs was well over 200 per year between 2017 and 2019.

Despite the recent downturn, Chua told Fierce that overall, the IPO market is open again.

Chua added that given the current market focus on cybersecurity, companies like Wizz could benefit from potential overvaluation.

In the meantime, Chua said that Wizz's big backers, including Index Ventures, Sequoia Capital, Insight Partners, GreenOaks Capital Partners, Andreessen Horowitz and Advent International, will be there to support the company throughout the IPO process. Indeed, a recent blog post from Andreessen Horowitz shows just how enamoured investors are with Wizz.

As a relatively young company (just over four years old) that has seen incredible ARR growth, Wiz is in a strong negotiating position, and management and investors are likely confident that they can maintain their momentum, Chua concluded.

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