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

Markdown copy of https://realalpha.app/s/m-a-is-a-tool-for-executing-strategy-not-the-strategy-itself/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Nikesh Arora](https://realalpha.app/people/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.
- Host: [David Senra](https://realalpha.app/people/david-senra/) · Host, Founders · Has read an entrepreneur's biography every week for Founders since 2016.
- Show: Founders
- Episode: [How to Win Deals & Grow a $250B Business | Nikesh Arora, Palo Alto Networks](https://realalpha.app/v/BKz2Dy-mKEM/), Nov 8, 2026
- Moment: 30:54 to 33:27 of the episode (3 min), playing on https://realalpha.app/s/m-a-is-a-tool-for-executing-strategy-not-the-strategy-itself/; the episode from there: https://realalpha.app/v/BKz2Dy-mKEM/?t=1854

## Quote

> “**M&A is not a strategy**. M&A is a mechanism to validate or to amplify your strategy or to execute your strategy.”
> — [Nikesh Arora](https://realalpha.app/people/nikesh-arora/) at [32:15](https://realalpha.app/v/BKz2Dy-mKEM/?t=1935) · Founders

## 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.

From “How to Win Deals & Grow a $250B Business | Nikesh Arora, Palo Alto Networks”, Nov 8, 2026. [Watch the full episode](https://realalpha.app/v/BKz2Dy-mKEM/)

## Transcript

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

[31:01](https://realalpha.app/v/BKz2Dy-mKEM/?t=1861) 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.

[31:19](https://realalpha.app/v/BKz2Dy-mKEM/?t=1879) 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.

[31:46](https://realalpha.app/v/BKz2Dy-mKEM/?t=1906) 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.

[32:13](https://realalpha.app/v/BKz2Dy-mKEM/?t=1933) 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.

[32:40](https://realalpha.app/v/BKz2Dy-mKEM/?t=1960) 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.

[33:02](https://realalpha.app/v/BKz2Dy-mKEM/?t=1982) 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