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Paragon, an Israeli spyware maker that has largely kept a low profile in recent years, was acquired last week by American private equity giant AE Industrial Partners, according to Israeli news reports.
Tech news website Calcalist reported that the investment firm bought Paragon for $500 million, and depending on how the company grows, the deal could reach $900 million. Globes reported that the upfront payment is $450 million, 20% of which will go to Paragon’s 400 employees, and 30% to the five co-founders, with the remaining 50% going to U.S. venture capital fund Battery Ventures and Israeli venture capital fund Red Dot.
In 2021, Forbes first revealed the existence of Paragon, which didn’t — and still doesn’t — have a website. The magazine reported that the company was founded by a group of former Israeli intelligence officers: Ehud Schneorson, former commander of Unit 8200, a renowned Israeli spy agency whose alumni often then work in the cybersecurity private sector, as well as CEO Idan Nurick, CTO Igor Bogudlov, and vice president of research Liad Avraham.
In October, Wired reported that U.S. Immigration and Customs Enforcement had signed a one-year contract worth $2 million with Paragon to acquire a “fully configured proprietary solution,” which included licenses, hardware, warranties, maintenance, and training. Last month, The New Yorker cited a Paragon source who said that the ICE deal came after a vetting process in which Paragon reportedly demonstrated that it had controls in place to prevent customers in other countries from hacking U.S. residents.
By acquiring Paragon, AE Industrial follows the example of other Western investment firms investing in Israeli spyware makers. In 2014, U.S. private equity firm Francisco Partners paid $130 million to acquire 70% of NSO Group’s shares, Calcalist reported at the time. The same year, Francisco Partners was in contact with the now-defunct Italian spyware firm Hacking Team, according to leaked emails from the company, which were stolen and then published online by the notorious hacktivist Phineas Fisher.
