How AI and geopolitics are reshaping cybersecurity

Amid a relatively soft deal making environment, one bright spot this year has been the surge in cybersecurity deals. So what's fueling activity in this space, and how are factors such as AI and rising geopolitical tensions affecting the industry? I'm Alison Nathan, and this is Goldman Sachs Exchanges. To discuss the forces shaping cybersecurity, I'm sitting down with Marco Paletti, global head of securities software within the technology, media, and telecommunications group in our investment banking business. Marco, welcome back to Exchanges. It's

good to be here.

So, Marco, the cybersecurity sector is one of the few that's actually seen a pickup in m and a activity this year. We've seen a number of deals, including Google's largest ever acquisition to purchase cybersecurity startup, Wiz, for $32,000,000,000. What are some of the drivers behind deal activity in the space? You

know, it's a good question. I would say the reality is security is just really important. And because it's really important, it's really important to a lot of potential buyers. And so when I look at what's been going on in the last few years, the call it the universe of buyers that we have in cybersecurity has really expanded. Last year, for example, we also advised Mastercard on their acquisition of Recorded Future, which was a threat intelligence company. And so when I think about what's going on, it's really, I would say, two or three main factors. The first one is it's just a much more dan

And so are there certain sectors that are seeing more activity and what's driving that activity?

Yeah, I would say when you look at the activity in M and A and cybersecurity, you kind of have to follow innovation. And so where we've seen a lot of activity in the last few years and in the last few months is everything on a cloud security. You were talking about the Waze transaction. I would say everything on security operations. So security operations, meaning how you help companies actually deal with security issues and remedy them. That's been a really important theme. Lots of M and A that we've already seen, a lot more that I expect to come. And another big thing has been AI. Obviously,

And so do you see the pace of these transactions picking up? How do you view the pipeline from here?

I mean, look, the pipeline is as high as it's ever been. Again, when you look at dry powder from private equity firms, it's as high it's ever been. And so they need to deploy that capital. They also own a lot of assets today that will need to find a home, be that in the public markets or through M and A, in the next few quarters and years. And when I look at the large strategic environment we were talking about earlier, I think there's a ton more to do. I think there's a ton more to do to keep being relevant to customers. And so the pipeline just keeps on growing. And

is that also the case for IPOs? What is the IPO market looking like? It's