FILE PHOTO: The logo of Mellanox Technologies is seen on one of its office buildings in the northern Israeli town of Yokneam October 9, 2013.
(photo credit: NIR ELIAS / REUTERS)
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 - IPOs, mergers and acquisitions, and private-equity buyouts - were recorded during the six-month period, including Nvidia's mega-acquisition of Yokneam Illit-headquartered Mellanox Technologies for $6.9b. in March.
Excluding the Mellanox deal, exits in the first half of 2019 reached $7.58b., significantly higher than exits totaling $6.49b. during the same period in 2018.
While the number of exits decreased slightly from 73 last year, average exit value also set a five-year record as it increased from $108.5m. annually in 2018 to $116.6m., almost double the $63m. average deal value 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," 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."
Four IPOs (initial public offerings) were completed by Israeli firms in the first half of 2019, with online marketplace Fiverr and cybersecurity company Tufin 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 Adv. 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."
Exits of Israeli companies in 2018 reached $12.63b., with four "mega-deals" exceeding $1b. accounting for approximately 65% of the total value. Transactions exceeding $1b. were made by Synamedia, Mazor Robotics, Imperva and Orbotech, making the total exit value in 2018 stand at $4.53 billion – the lowest since 2014.
While the number of capital investments in Israeli start-ups 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.
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