Palo Alto Networks Inc. will pay about $800 million to acquire Expanse Inc., a well-funded startup with a software platform that enables enterprises to find internal systems exposed to the internet.

The deal was announced today. Palo Alto’s $800 million proposed offer breaks down to $670 million in cash and stock, plus an additional $130 million in replacement equity awards. For Expanse’s investors, it’s a significant return on the $136 million or so they had bet on the startup.

Sensitive information technology assets such as databases are normally accessible only to users inside the corporate network. However, technical issues such as configuration errors sometimes leave systems open to outside connection requests, enabling hackers to potentially discover them via the public web and launch cyberattacks. Expanse’s platform scans the internet for exposed systems and notifies cybersecurity teams if it finds assets belonging to their organizations.

Expanse also provides features to help cybersecurity teams act on this information. The startup’s platform sorts exposed systems it detects based on the severity of the risk they pose and detects if a system has received any suspicious traffic.

Palo Alto Networks will use the technology it’s obtaining through the deal to enhance its Cortex line of threat detection products. The information that Expanse gathers about vulnerable systems and traffic to those systems should enable Palo Alto Networks to give customers a more complete picture of security risks.

“By integrating Expanse’s attack surface management capabilities into Cortex after closing, we will be able to offer the first solution that combines the outside view of an organization’s attack surface with an inside view to proactively address all security threats,” said Palo Alto Networks Chief Executive Officer Nikesh Arora.

The technology that the company is gaining through the acquisition is field-proven. Expanse says its platform is used by Fortune 500 companies such as Accenture Plc and multiple branches of the U.S. government.

Palo Alto Network is paying $800 million for Expanse because the startup is addressing a security priority, finding exposed internal systems, that is shared by a large number of enterprises and therefore represents a substantial market opportunity. Enterprise networks include thousands of IT assets or more that each have the potential to become an attack vector in the event of a configuration issue. The large number of potential attack vectors, plus the fact that system configurations regularly change, means it’s impractical to look for issues with purely manual methods.

Palo Alto’s acquisition of Expanse will mean more intense competition for the other cybersecurity providers competing in the same niche. Among them are venture-backed startups such as SecurityScorecard Inc. and RiskRecon Inc., which counts Accel as an investor. 

Palo Alto Networks expects to complete the acquisition by Jan. 31, 2021. 

Photo: Palo Alto Networks