A deal that looked like a successful exit has ended in large layoffs. According to Calcalist and Ynet, Israeli cybersecurity company XM Cyber laid off about 250 of its roughly 300 employees in Israel, leaving only about 50 in the country to keep serving existing customers.
What CrowdStrike bought
In July, US cybersecurity giant CrowdStrike announced it was buying XM Cyber's technology in a deal valued at about $600 million. According to Ynet, the deal includes $145 million in cash and a stock component. But CrowdStrike bought only the intellectual property: the source code and more than 45 patents. The company's customers and revenue were not part of the deal, so most employees did not move over either.
The German owners
XM Cyber, founded by veterans of the Mossad and Israel's security establishment and specializing in simulating attacks on corporate networks, was bought in 2021 by Germany's Schwarz Group, owner of the Lidl and Kaufland retail chains, for about $700 million. In other words, based on the reported valuations, the owners sold the technology for less than they paid for the company. According to Calcalist, employees are expected to receive tens of millions of dollars from their options, and those who stay will receive retention bonuses.
A familiar pattern
This is not the first time a cybersecurity deal has ended in layoffs in Israel. When giants buy technology rather than a whole company, they usually take a small team and let the rest go. It is the less talked-about side of the wave of Israeli cyber exits: alongside record funding, hundreds of employees find themselves looking for work.
