Proofpoint agreed to buy Varonis. What the months before close decide for the people who built it.

• Announced October 15, 2026 by Proofpoint and Varonis. The merger agreement is dated October 15, 2026, and the companies said the Varonis board approved it unanimously. Proofpoint is a portfolio company of Thoma Bravo, and the Form 8-K says Proofpoint and its merger subsidiary are affiliates of funds advised by Thoma Bravo, L.P.
• Consideration is all cash, $49.75 for each share of Varonis common stock, without interest and less any required withholding, in a deal the companies valued at approximately $6.3 billion. The companies said Varonis’s common stock would cease trading on Nasdaq upon completion, and the agreement has Proofpoint delist and deregister it as promptly as practicable after close (Section 5.15).
• Expected close, as the companies stated at announcement, in the first half of 2027, subject to customary closing conditions, including approval by Varonis shareholders and receipt of regulatory approvals. In its preliminary proxy statement dated November 5, 2026, Varonis said it expected to complete the merger in the first half of 2027 and that the exact timing could not be determined.
• The vote needs the holders of at least a majority in voting power of the outstanding shares entitled to vote, so a failure to vote has the same effect as a vote against. Varonis filed a preliminary proxy statement dated November 5, 2026 for a virtual special meeting, with the meeting date and record date left blank. SEC rules generally require a definitive proxy statement to state the meeting date. Varonis CEO Yaki Faitelson agreed to vote his shares, about 0.67% of the total, for the deal.
• The regulatory conditions are the end of the waiting period under the Hart-Scott-Rodino Act (Section 6.1(c)) and, as the preliminary proxy lists them, clearances under antitrust and foreign investment laws in Australia, France, Italy, Luxembourg and the United Kingdom. The preliminary proxy says Varonis and Proofpoint filed their HSR notifications on October 19, 2026, that the 30 calendar day waiting period would expire at the end of November 18, 2026, Eastern Time, unless terminated earlier, and that a Second Request would bring a second 30 day waiting period, which would not begin until the companies had substantially complied with it.
• If the merger is not completed by the end of July 15, 2027, New York time, either Proofpoint or Varonis can terminate the agreement, unless its own breach caused or materially contributed to the failure to close by then. If on that date the regulatory conditions are the ones left unmet, the date extends automatically to October 15, 2027, and shorter extensions tied to the Marketing Period for the debt financing can apply (Section 7.1(b)(i)).
• Closing takes place on the third business day after the last closing condition is met or waived, unless Proofpoint and Varonis agree in writing on another date. If the Marketing Period for the debt financing has not ended, closing waits for a date Proofpoint picks during that period or the third business day after it ends, whichever comes first (Section 1.2). The merger is not subject to a financing condition. The Form 8-K says funds managed by Thoma Bravo committed equity contributions and financial institutions committed debt financing.
• Each option, vested or unvested, is cancelled at close for cash equal to $49.75 minus its exercise price for each share, less tax withholding, paid no later than the first regular payroll date at least five days after close. Options with an exercise price of $49.75 or more are cancelled with no payment (Section 2.2(a)). Varonis’s Form 10-K for 2025 says all of its outstanding options had vested as of December 31, 2025.
• An RSU or PSU that vests at close under the terms of its own award agreement as in effect on October 15, 2026, including RSUs held by Varonis directors who are not employees, is a Single Trigger Award. It is cancelled for $49.75 in cash per share, less withholding, with PSUs counted at the level described below, paid no later than the first regular payroll date at least five days after close (Sections 2.2(b) and 2.2(c)).
• Every other RSU becomes a cash award, called a Converted Restricted Cash Award, worth $49.75 for each share. It keeps the same vesting terms, including continued service, and pays in cash as soon as practicable after each vesting date and no later than the first regular payroll date after it, less withholding, subject to additional terms in a Company Disclosure Letter that is not filed with the agreement (Section 2.2(b)). The Form 8-K summary says these converted RSUs will be paid in cash or in equity of the surviving corporation or its parent. The preliminary proxy says that after an initial public offering of Proofpoint or its ultimate parent company, Proofpoint may pay vesting awards in shares of the public company instead of cash, or convert unvested awards into RSUs of the public company on the same vesting terms.
• All other PSUs become cash awards, called Converted PSU Awards, for the number of shares set by what the agreement calls the PSU Performance Settlement Level, with performance treated as met at that level, and pay in cash after vesting, on the same timing as the converted RSUs, subject to additional terms in the Company Disclosure Letter (Section 2.2(c)). The Form 8-K summary says these converted PSUs, like the converted RSUs, will be paid in cash or in equity of the surviving corporation or its parent.
• For converted PSUs, the Form 8-K summary describes the share count by performance year. It says performance for the 2024 and 2025 performance years is achieved based on actual performance, for the 2026 performance year at target or maximum performance, as applicable, and for the 2027 and 2028 performance years based on actual performance. The agreement’s definition uses actual performance for a period certified before close, the maximum for a 2026 period unless the Company Disclosure Letter says otherwise, and a number set in that letter, based on actual performance, for a period ending after December 31, 2026 (Exhibit A to the agreement).
• The ESPP offering period that was running on October 15, 2026 ends on the earlier of its scheduled purchase date and the fifth trading day before close, when the contributions buy shares, and those shares are cancelled at close for $49.75 each. No new offering period starts, no one new can join, and participants can lower their elections but not raise them. The ESPP ends immediately before close (Section 2.2(d)). Varonis’s Form 10-K says its 2025 ESPP, approved by stockholders on June 5, 2025, buys shares at not less than 85% of the fair market value on the first day or last trading day of the offering period.
• From close through the earlier of December 31, 2027 and 12 months after close, Proofpoint agreed to provide each continuing employee cash compensation levels (including salary, target annual bonus opportunities and short term cash commission opportunities) no less favorable in the aggregate than before close, and employee benefits in the aggregate either no less favorable than those of similarly situated Proofpoint employees or substantially comparable to the Varonis benefits, with stated exclusions (Section 5.9(a)). Varonis service counts for eligibility, vesting and the level of paid time off and severance benefits (Section 5.9(b)). The agreement gives no employee a right to continued employment, and no employee can enforce these terms under it (Section 5.9(d)).
• If Proofpoint asks at least ten days before the closing date, Varonis will end its 401(k) plans no later than the day before the closing date and fully vest all participants, contingent on the deal closing (Section 5.9(c)). The preliminary proxy says the agreement lets Varonis determine in good faith and pay its existing annual cash incentives, commissions and other bonuses for 2026 in the ordinary course of business consistent with past practice.
• For awards held under Section 102 of Israel’s tax ordinance, payments go to the Section 102 Trustee for the holder, and the trustee releases them under Section 102 and any Israel Tax Authority rulings. Varonis is to seek rulings on withholding and on whether converted RSUs keep their Section 102 treatment (Sections 2.2(f), 2.4(b) and 5.16). Varonis’s Form 10-K counted 2,658 employees and independent contractors as of December 31, 2025, including 1,139 in the United States, 916 in Israel and 603 in other countries.
• In an October 15, 2026 email to employees that Varonis filed with the SEC, CEO Yaki Faitelson said the combination was expected to close in the first half of 2027, pending necessary approvals, that Varonis would continue its business as usual as it moved toward that step, and that after the closing it would no longer be a publicly traded company.

Sources. Proofpoint and Varonis joint press release, October 15, 2026, Varonis’s Form 8-K filed the same day with the merger agreement dated October 15, 2026 as Exhibit 2.1, Varonis’s preliminary proxy statement dated November 5, 2026, the October 15, 2026 email to employees that Varonis filed with the SEC, and Varonis’s Form 10-K for the year ended December 31, 2025. BFA Wealth Management isn’t affiliated with Proofpoint, Thoma Bravo or Varonis. The terms and dates above come from the announcement and filings named here, as of the date the facts were checked. They can change before close, so confirm the treatment of your own awards with HR before you act.

A take private is an investor group buying every share of a public company, after which the stock stops trading. Here the buyer is Proofpoint, a portfolio company of Thoma Bravo, with Thoma Bravo providing committed equity financing. Proofpoint agreed to pay $49.75 in cash for each Varonis share, and at close Varonis stock comes off Nasdaq. Each share you own becomes $49.75 in cash, and that is generally a taxable sale, with long term rates for shares held more than a year. Shares from an ESPP purchase or an ISO exercise cashed out before their holding periods pass are generally a disqualifying disposition, and part of their value is taxed as ordinary income. For ESPP shares, part of the gain can be ordinary income even after both holding periods pass. Before Your Company Is Sold for Cash covers the cash side, and When Your Company Goes Private covers what changes when there is no public stock after close.

At close, your unvested awards become cash awards, not stock in the buyer. The preliminary proxy says Proofpoint has been privately held since August 31, 2021. Under the merger agreement, unvested RSUs become cash awards worth $49.75 a share that keep their vesting schedule and pay in cash as each date arrives, with PSUs counted at a level the agreement defines. Vested options, and any RSUs or PSUs that vest at close under their own award agreements, are paid out in cash soon after close. For employees, cash for RSUs and PSUs is taxed as pay when it is paid, and cash for options is generally taxed as ordinary income. Federal withholding on it can be a flat 22%, with 37% required on supplemental pay above $1 million in a year, and that may be less than you owe. The Form 8-K summary says the converted awards will be paid in cash or in equity of the surviving corporation or its parent, and the preliminary proxy says that after an initial public offering of Proofpoint or its ultimate parent company, Proofpoint may, in its discretion, switch them to shares or RSUs of the public company. Ask HR how that could apply to your awards.

Timing matters for the ESPP. The offering period that was running when the agreement was signed ends on its scheduled purchase date or the fifth trading day before close, whichever comes first, and no new one starts, so it may be the last. Any shares it buys that you still hold at close are cashed out for $49.75 before the ESPP holding periods can pass, so part of that gain is generally ordinary income. This page keeps to U.S. tax rules. If you are taxed outside the United States, including the Varonis team in Israel, that country’s rules apply, U.S. rules may apply as well, and the agreement has separate terms for awards under Israel’s Section 102.

The cash for your shares counts in the tax year of close. The cash for options and for awards that vest at close counts in the year it is paid, and the cash awards that replace your unvested RSUs and PSUs count as pay in the year each one is paid, usually just after it vests on the old schedule, with no Varonis stock left to hold after close. That is the part worth planning before close.

1. Which of my grants vest at close under their own award agreements and are paid out, and which become cash awards on my old vesting schedule? Will HR confirm that for each grant in writing?
2. Sections 2.2(b) and 2.2(c) of the merger agreement say my converted RSUs and PSUs pay in cash, and the Form 8-K summary says cash or equity. Which applies to my awards, and does it depend on a Proofpoint IPO?
3. For my PSUs, how many shares does the PSU Performance Settlement Level count for each performance year, and does my 2026 year count at target or at maximum?
4. If I leave or am let go before close, what do I keep, and how long do I have to exercise vested options? If it happens after close, does my award agreement or a Varonis severance plan speed up my unvested cash awards, and for how long?
5. The agreement limits new equity grants before close (Section 5.1(b)(x)) and sets pay and benefit levels for a period after it (Section 5.9). What do those mean for my refresh grant, my 2026 bonus and my 401(k)?
6. If I hold ESPP shares, is the plan a Section 423 plan, and will my shares have met its holding periods, more than two years from the start of the offering and more than one year from purchase, by the day they are cashed out at close?
7. For employees, cash for RSUs and PSUs is taxed as pay when it is paid. Federal withholding can be a flat 22%, and it must be 37% on supplemental pay above $1 million in a year. Is that enough for my bracket?
8. Could the golden parachute rules (Section 280G) reach me as an officer, a more than 1% owner or one of the highest paid 1% of employees, and would my deal payments reach three times my base amount, where a 20% excise tax can apply?
9. My options are cashed out at close for $49.75 minus the exercise price, less withholding. Would exercising any of them before close change the tax, and are any of them ISOs with their own holding periods?
10. Should I sell Varonis shares I own in an open trading window before close or hold them until close, and how does each choice change the tax year and whether my gain is long term?
11. How much cash arrives at close, how much arrives on each vesting date after it, and what is my plan for it?
12. What happens to my awards and the ESPP if the deal does not close by July 15, 2027, or by the end of any extension, and what would I do then?

Nobody at your company is paid to answer these for you. HR will tell you the mechanics. Your CPA will handle the return. The person who puts it all on one page, in the order it matters, is usually missing. That is the gap we fill.