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Tom Yeung here with your Sunday Digest.
In the 2010s, getting acquired was the ultimate startup status symbol.
Waze… Nest… DeepMind… Fitbit…
One by one, the most promising companies in tech got swallowed by giants like Alphabet Inc. (GOOGL) and Meta Platforms Inc. (META), turning their founders and early employees into multimillionaires. America’s top five tech firms made at least 616 purchases between $1 million and $50 million alone that decade, according to the Federal Trade Commission. Hundreds more happened outside that narrow window.
M&A exits became such a fixture that HBO built a TV series around it. The hit show Silicon Valley followed a founder who kept refusing, fumbling, and blowing up opportunities to cash out because he wanted to build something bigger.
The AI Revolution is now creating a new wave of M&A exits. Only this time, many of the acquisition targets are publicly traded companies that regular investors can buy first, rather than sending in a job application and hoping to be employee No. 3 at a company like DeepMind.
Many of these are happening at wonderful premiums. When RadNet Inc. (RDNT) bought AI cancer-detection company iCAD in July 2025, shareholders pocketed a roughly 100% premium overnight. Adobe Inc.’s (ADBE) purchase of AI-powered digital marketing firm Semrush happened at a 78% markup.
Even the “disappointing” deals are closing at 20% premiums – an instant gain that usually takes the S&P 500 two years to grind out.
Now, InvestorPlace Senior Analyst Luke Lango believes he’s found a way to get into these AI investments even earlier, with potentially even bigger payouts. And in a new free presentation, , he lays out his step-by-step method for spotting these targets, and how to buy these firms before everyone else gets in.
To show you why the timing matters, I’ll walk you through five companies that look ripe to be bought. AI is redefining tech, and cash-rich incumbents are about to spend enormous sums to stay relevant.
Cybersecurity: Where Buyers Are Hungriest
The busiest corner of the current AI market is cybersecurity, a field that’s quickly getting bundled into AI platforms themselves.
Both sides are motivated to get deals done. AI companies want to buy because security firms have the data they need. They know their AI security products will only be as good as the data it’s trained on.
Meanwhile, smaller cybersecurity companies are getting squeezed on two sides: by new AI entrants and by “one-stop-shop” consolidators like Fortinet Inc. (FTNT) and CrowdStrike Holdings Inc. (CRWD) that IT departments increasingly prefer. For midsized players, that leaves two options: Sell out or bulk up fast enough to compete.
Most will choose the first way out. Sector valuations are depressed (ironically thanks to AI fears), making it hard for smaller players to raise cash and acquire their way to a one-stop-shop size. Besides, high-profile cybersecurity scares are making AI labs even more motivated buyers. Last week, a rogue OpenAI agent hacked another AI startup, highlighting the desperate need for high-quality cybersecurity.
Here are the three public companies I think are likeliest to get a knock from M&A suitors:
Tenable Holdings Inc. (TENB): This vulnerability management (VM) company was exploring a sale as after receiving takeover interest. A deal looks even more likely today, because Tenable is a leader in the internal IT scanning that defends against AI-orchestrated attacks.
Tenable also throws off steady cash flows and carries zero net debt – catnip for private equity firms like Thoma Bravo and Permira. Consolidators like CrowdStrike might also get involved. And make no mistake: A buyout is the best outcome here. Tenable is caught between AI upstarts and one-stop shops, and its path as a standalone company is (fittingly) untenable.
Rapid7 Inc. (RPD): This Boston-based cybersecurity firm is even further down the road to a sale. Rapid7 is a smaller VM company than Tenable, and activist investor Jana Partners pushed for a deal back in 2025. The two sides eventually settled that year with Jana adding three board members and Rapid7 promising a turnaround. That hasn’t been enough. In March 2026, the activists struck a new agreement to raise its stake in Rapid7 to almost 20%. Three months later, Jana replaced the outgoing CEO with one of the three board members.
When an activist takes the wheel like that, the destination is usually the next available exit. With so many AI firms moving into vulnerability management and Rapid7’s stock so low, the company will have no shortage of potential bidders.
SentinelOne Inc. (S): This Silicon Valley cybersecurity firm, with roots in Israel, is by far the largest on our list, with a $6 billion market valuation. It is also the most likely to get acquired by a strategic buyer.
In July 2025, reports surfaced that Palo Alto Networks Inc. (PANW) was seeking to acquire SentinelOne, which had landed in political hot water after hiring Chris Krebs, the former head of the Cybersecurity and Infrastructure Security Agency (CISA). Krebs had a high-profile falling out with the U.S. president over the 2020 election fraud claims. A week later, Palo Alto purchased a different Israeli cybersecurity firm, CyberArk, and denied it had seriously considered buying SentinelOne.
Nevertheless, SentinelOne forced Krebs out anyway, setting itself up as a more attractive acquisition target. Cisco Systems Inc. (CSCO) is a logical suitor, now that antitrust risk has eased. Its endpoint security products trail SentinelOne’s badly. And Alphabet’s $32 billion blockbuster acquisition of cybersecurity firm Wiz shows Big Tech is also willing to pay up for security.
Best of all, SentinelOne has the widest moat of the three cybersecurity names here. Even if no offer ever comes, the company should keep growing on its own. Either way, shareholders win.
AI Software: The “Vibe Coding” Squeeze
The other hotbed for M&A activity is AI software – targeted both by AI companies and by traditional software-as-a-service (SaaS) companies scrambling for more AI exposure.
This segment has already seen some high-profile acquisitions. To name a few:
- LivePerson Inc. (LPSN) (conversational AI) acquired by SoundHound AI Inc. (SOUN) for a 22% premium
- Publicis Groupe is buying LiveRamp Holdings Inc. (RAMP) (consumer data) at a 30% premium.
- Perfect Corp. (PERF) (AI in fashion) is set to go private for a 48% premium.
The pressure to sell is only building. Advanced AI now makes upstart “vibe code” competing products possible, and these are often built in a fraction of the time and cost. Plenty of software CEOs will find it more attractive to exit for a double-digit payout rather than fight an endless wave of copycats.
Here are my two picks to get bought out:
BILL Holdings Inc. (BILL): This Silicon Valley payments firm has been targeted by three separate activist investors since October: Starboard Value, Elliott Investment Management, and Barington Capital Group. All have essentially said the same thing: Either become more profitable or sell yourself to someone who can make that happen.
BILL has been attempting to do both. Analysts now forecast a 19% increase in earnings per share this year (up from 4% in 2025), and another 27% increase in 2027. At the same time, the payments firm has shopped itself to at least one buyout group, Hellman & Friedman. With share prices now down 18% since January and earnings estimates on the rise, BILL is my top software pick to get taken out by an AI suitor.
BlackLine Inc. (BL): One analyst recently called BlackLine “the cleanest takeout” for 2026. I agree. The AI-powered accounting software platform is a particularly popular add-on for SAP SE (SAP), which already made a $66-per-share offer for BlackLine in June last year. The German company was considering raising their offer as recently as October after BlackLine’s board rejected the offer, calling it too low.
Two factors now make a buyout almost certain.
- A cheaper price tag. BlackLine’s stock price has slid below $30 in a broader SaaS selloff. At these levels, a fresh $66-per-share offer would be impossible to refuse. Even a $50-per-share offer might be acceptable to the board.
- A rebuilt board. After the SAP rejection, activist investor Engaged Capital threatened a proxy fight. In a March 2026 settlement, BlackLine added two new directors (including an M&A banker) and explicitly gave its Strategic Committee the ability to negotiate a sale. BlackLine’s founder, Therese Tucker, also retired last month, clearing the way for an exit.
That makes BlackLine a particularly attractive target for traditional major business software companies seeking an AI edge. The firm was an early adopter of agentic AI in accounting, making it the ideal bolt-on product for a legacy software firm.
How to Actually Play the AI Merger Boom
In the 2010s, even wealthy accredited investors could not buy themselves a seat at the M&A table. The top venture capital funds like Sequoia, Benchmark and a16z were closed to retail investors, and institutional cash often had trouble getting into these oversubscribed funds.
Everyone else had to wait for startups to go public… and hope they didn’t get bought out by Big Tech first.
That meant lower returns for regular investors. Here’s how investors in ride-sharing firm Uber Technologies Inc. (UBER) fared depending on when they got in, assuming they held on through present day:
- Seed (2010). First Round bought at ~$0.009/share, a 770,000% return
- Series A (2011). Benchmark bought at ~$0.13/share, a 54,000% return
- Series B (2012). Menlo Ventures bought at $0.65/share, 10,000% return
- Series C (2013). Google Ventures bought at $5, a 1,400% return
- Secondary Market (2018). SoftBank bought shares at $32.87, a 112% return
- IPO investor (2019). Bought at $45, a 56% return
The returns evaporate with each funding round. Early investors are the biggest winners, while later ones start competing for leftovers. The AI-powered M&A boom will turn out the same way, which is why getting in at the right time matters so much.
Fortunately, that “right” time is within reach for regular investors. In his upcoming presentation, the on Thursday, July 30, Luke Lango walks through his system for identifying the next AI superstars before everyone else does, and how to get in on these promising deals.
Until next week,
Thomas Yeung, CFA
Market Analyst, InvestorPlace
