U.S. Equity Firm Snaps Up Israeli Spyware Company Paragon in a $500 Million Deal

Last week, American private equity firm AE Industrial Partners made headlines by purchasing Paragon, an Israeli company known for creating spyware. The deal is worth $500 million, with potential growth pushing it up to $900 million.

Israeli news sources, including Calcalist and Globes, broke the story, noting that the initial payment stands at $450 million.

Founded by former Israeli intelligence officers, Paragon has remained relatively under the radar, operating without a public website. Forbes first shed light on the company in 2021, identifying its key figures: Ehud Schneorson, a former commander of Unit 8200, CEO Idan Nurick, CTO Igor Bogudlov, and Liad Avraham, vice president of research.

The tech firm’s main product, Graphite, is spyware that allows hacking into phones to access various apps like WhatsApp and Gmail. This product positions Paragon as a competitor to the Pegasus software from NSO Group, another Israeli company known for similar technologies.

AE Industrial’s acquisition reflects a continuing trend of Western firms investing in Israeli tech companies that specialize in spyware. This move follows a historical precedent set by Francisco Partners, which acquired a significant share of NSO Group back in 2014.

In addition to the company’s founders and employees, significant financial beneficiaries of this acquisition include U.S. venture capital fund Battery Ventures and Israeli fund Red Dot.

Recent reports from Wired and The New Yorker have highlighted Paragon’s business with U.S. agencies, such as a $2 million contract with U.S. Immigration and Customs Enforcement.

This deal, which includes licenses and training, followed a thorough vetting process, ensuring safeguards against the misuse of its technology within the U.S.

This strategic purchase by AE Industrial not only strengthens its position in the tech sector but also stirs concerns around the implications of spyware in global geopolitics, especially considering past controversies involving similar firms and the targeting of U.S. citizens.