Hi-tech exits swell to $14.5b. in first half of 2019

Israeli hi-tech company exits swelled to a five-year record of $14.48 billion in the first half of 2019, according to a report by IVC Research Center and law firm Meitar Liquornik Geva Leshem Tal.

Sixty-six exits including initial public offerings, mergers and acquisitions, and private-equity buyouts were recorded during the six-month period. The biggest was Nvidia’s $6.9b. mega-acquisition of Yokneam Illit-headquartered Mellanox Technologies in March. Excluding the Mellanox deal, exits in the first half of 2019 reached $7.58b., which is significantly higher than the $6.49b. in exits during the same period in 2018.

Although the number of exits decreased slightly from 73 last year, the average exit value set a five-year record as it increased from $108.5 million in 2018 to $116.6m. this year, and almost doubled the $63m. average in 2017.

“In the first half of 2019, we witnessed a significant increase in the total volume of exits, particularly those with a value exceeding 100 million dollars,” said Adv. Shira Azran, partner at Meitar Liquornik Geva Leshem Tal.

“We identify a similar trend in transactions that are currently under negotiation. There is a large variety of buyers, and, in some cases, the purchase price is not only a function of an assessment of the value of the acquired technology, but also a determination of value based on revenue and profitability levels of the acquired company as a reflection of the maturity of the acquired companies,” said Azran.

Four IPOs were completed by Israeli firms in the first half of 2019 including online marketplace Fiverr and cybersecurity company Tufin, now listed on the New York Stock Exchange.

“The two successful IPOs in the US are likely to generate interest among more Israeli companies that will want to examine initial public offerings as a path to exit and liquidity,” said Itay Frishman, partner at Meitar Liquornik Geva Leshem Tal.

“Naturally, an examination of these trends in a semi-annual period is limited, but we feel that a significant number of the exits in H1/2019 accomplished the investment model of investors and founders. We will need to wait for the full year’s results to evaluate this period compared with previous years,” said Frishman.

Exits of Israeli companies in 2018 reached $12.63b. by years end, but included four “mega-deals” exceeding $1b. by Israeli companies, which accounted for approximately 65% of the total value. Transactions exceeding $1b. were made by Synamedia, Mazor Robotics, Imperva, and Orbotech, bringing the net exit value in 2018 to $4.53 billion – the lowest since 2014.

While the number of capital investments in Israeli startups decreased slightly from 661 in 2017 to 623 in 2018, the total value invested reached a record high of $6.47b. in 2018 – a 17% increase compared to the $5.5b. raised the previous year.