Wiz turns down $23B Google deal

fortune.com

14 points·jmsflknr··9 comments

“I’m turning down 65x ARR so that I can do an IPO”

briefcase breaks open spilling out several pounds of scratcher tickets

Does this mean that Google may be able to acquire the company for less money on the public markets if they just wait a bit?

Depends on how much of the stock is actually available to purchase. If the owners of the company keep 51% (or 50% + 1 share? Whatever it is), then no.

The board has a fiduciary duty to consider a reasonable offer irrespective of what the float is

I mean, if they think they can get to 1bn ARR reasonably soon and get, say, 30x on the public markets that's already a better outcome (plus they don't have to work at Google) -- and given their growth rate, an even better multiple might be expected.

30x arr (not cash flow) is unbelievably high multiple in the current environment

Yeah, if we assume they are at 20% profit margin like FAANG or other tech / finance companies, at $1B ARR, they are making $200M net income per year. At 30-40 PE, they would be valued at $6-8B max.

In reality, they are most likely losing money at this point like most startups, might take them a few years to hit profitability. But that doesn't seem to have stopped previous startups from commanding insane valuations, so maybe Wiz is able to do that too.

facepalm – mixed up arr & cashflow as I was going to bed. thank you.

Your comment made me go look at the P/E ratio of Alphabet itself - they're valued at 38x earnings. In this context turning down 65x ARR seems fucking insane at best.

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