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Founders · 3 min · Nov 8, 2026

M&A is a tool for executing strategy, not the strategy itself

Nikesh Arora · Chairman & CEO, Palo Alto Networks

Nikesh Arora explains that he buys companies when he needs a team to win in a category and his own team is not ready.

In this episode

Full analysis
  1. 8:54More products make enterprise customer acquisition pay offPro pick 6 min
  2. 18:52Align on the product roadmap before signing an acquisition4 min
  3. 55:07AI raises cyber risk but does not replace security infrastructure4 min
  4. 16:15He buys the top two because profits concentrate there3 min
  5. 30:54M&A is a tool for executing strategy, not the strategy itself3 min
  6. 24:00Acquired founders need to learn to use the parent company's scale3 min
  7. 44:37Google's ad salespeople couldn't control price or volume2 min
  8. 52:04Parents shouldn't use family wealth to make children feel guilty3 min
“M&A is not a strategy. M&A is a mechanism to validate or to amplify your strategy or to execute your strategy.”
Nikesh Aroraat 32:15 · Founders
32:15

Takeaways

  1. Buy to fill a capability gap in a category you want to win.
  2. Weigh price against the space's future potential.
  3. Treat acquisitions as a way to execute strategy.

About this segment

Nikesh Arora explains that he buys companies when he needs a team to win in a category and his own team is not ready. He may pay more if the asset can become much more valuable over time.

Nikesh Arora

Nikesh Arora is chairman and CEO of Palo Alto Networks.

Chairman and CEO of Palo Alto Networks, which he grew into a $300 billion cybersecurity leader.

  • David Senra, Host · Host, Founders

    Has read an entrepreneur's biography every week for Founders since 2016.

From “How to Win Deals & Grow a $250B Business | Nikesh Arora, Palo Alto Networks”, Nov 8, 2026. Watch the full episode

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

  1. 31:01

    When I walked in, we had just bought a company called Evident.io. But also bought it before I got there. And then we ended up buying a company called Redlock, which was the same space. The difference was one only worked on Amazon. The other one worked on all three clouds. And I suspect the one that had been bought early was too early, which was bought by my predecessor. But it didn't matter. The company bought it too early.

  2. 31:19

    And then we bought the second one, which was in the same space, just further along. So sometimes you could buy stuff too early. It becomes a question of price, stage, and conviction if you marry the three, right? Am I convinced this is going to be a big space in the future, okay? If I'm convinced a big space in the future, I need to have a footprint in that space. Sometimes I can go spin up my own team and then go charge it down and go make it work, or I can go out and acquire something.

  3. 31:46

    The question is, will I go acquire something and how long have they been around in that space and, you know, how expensive are they going to get? I think the current times are most representative of the risk. Today, companies are getting funded valuations I don't understand. Imagine if I wanted to acquire a company today, the same company I'm trying to acquire today would be one-third, one-fourth the price three years ago in a different funding environment as compared to today.

  4. 32:13

    They're probably as early, but three times or four times more expensive today. So what do you do? You buy them if it makes sense on your strategy. Look, M&A is not a strategy. M&A is a mechanism to validate or to amplify your strategy or to execute your strategy. I was asked, what's the M&A strategy? I don't have one. I buy companies when I believe I need to go win in a category and I don't have my team at the place I'd like them to be at this point in time.

  5. 32:40

    I've got to go look for another team that's got to figure it out and have the right people in place. So you go buy it. If something's worth $200 million, it's worth $800 million because my job is to take the $200 million asset and turn that into a $5 million to $10 million asset. If something's worth $200 million, it's worth $800 million. What does that mean? As a $300 billion company, I should be buying things which I believe in the next 5 to 10 years will be worth $5 to $10 billion for us.

  6. 33:02

    So you're not going to remember the other $500 million? This is Egon Durban. So there was one of the most memorable parts of Ari Emanuel's book. They're buying IMG. Yes. And I think they wanted to pay $1.9 or $1.8, and it went to $2.2, something like that. And I think maybe it might have been Ari's team