XM Cyber Sells IP to CrowdStrike in $600M Deal Followed by Mass Layoffs

XM Cyber, an Israeli cybersecurity startup, has sold its intellectual property while laying off the vast majority of its local workforce. Sources indicate that out of approximately 300 employees in Israel, only 50 remain to handle existing clients. The widespread layoffs followed the initial announcement in July regarding the sale of its technology to CrowdStrike.

Financial Details of the Acquisition

While XM Cyber initially framed the transaction as a $600 million exit, the reality is more nuanced. CrowdStrike, the world's second-largest cybersecurity firm valued at $270 billion, acquired the technology for a modest cash sum of $145 million. However, according to recent filings with the US Securities and Exchange Commission (SEC), CrowdStrike also issued 2.1 million shares to XM Cyber's shareholders, primarily the German Schwarz Group, which had acquired the Israeli startup for $700 million during the peak hype of 2021.

"The transaction brings the total valuation to approximately $600 million, though CrowdStrike is acquiring neither the employees nor the ongoing customer contracts." — Market Sources

Startup M&A Activity in Israel

At the time of the deal's completion, CrowdStrike shares traded at $208 and have since surged by 25%. CrowdStrike is reportedly in talks to acquire another Israeli startup, Orion, for roughly $500 million. In recent years, the cybersecurity giant has acquired several local startups, including Seraphic Security for $400 million, Adaptive Shield and Flow Security in 2024 for a cumulative $700 million, and Bionic for $350 million in 2023.

XM Cyber was founded in 2016 by former Mossad director Tamir Pardo, Noam Erez, Boaz Gorodissky, and businessman Shaul Shani. The company developed attack path management and breach and attack simulation (BAS) technology. Although early investors achieved high returns, the Schwarz Group ultimately struggled to scale the operations, leading to the current asset sale.