Israel marks 70% leap in M&A deals in 2021, record number of sales

Overall deal value totaled $17 billion, while the number of deals nearly doubled, reaching 238

Israeli national flags flutter in front of an office tower at a business park housing high tech companies, at Ofer Park in Petah Tikva. (photo credit: RONEN ZVULUN / REUTERS)
Israeli national flags flutter in front of an office tower at a business park housing high tech companies, at Ofer Park in Petah Tikva.
(photo credit: RONEN ZVULUN / REUTERS)

Israel marked a 70% leap in the overall value of mergers and acquisitions in 2021, according to PwC in its 2021 M&A report released on Thursday.

The report, which summarizes the mergers and acquisitions related to Israel companies (either as buyers or sellers) that closed in the past year, showed a climb to 238 deals, the highest total in the past decade and almost double the number of transactions in the previous year.

Due to the choice of many companies to take the IPO route or merge via SPAC, the number of so-called “megadeals” fell. Only one deal, the acquisition of Lumenis, closed at more than $1 billion, as compared with five such deals in 2020. As a result, the average deal value dropped to $126 million, an 18% decline from 2020.

According to the report, the number of Israeli companies acquired by Israeli companies amounts to 82 transactions totaling $2.8 billion. Of these, 44 transactions were in the technological sector (totaling approximately $1.5 billion), and 12 transactions in the field of services and consumer products (totaling $291 million).

“We’re wrapping up a record-breaking year in terms of the number of deals, which stemmed in part from the large appetite of companies to make acquisitions,” said Liat Enzel-Aviel, partner and transaction services leader at PwC Israel. “This occurred at a time when some of them compromised on various parameters, such as price and the maturity of the solution that was acquired, with their goal simply being to close the deal.”

 Liat Enzel-Aviel, partner and transaction services leader at PwC Israel.  (credit: Courtesy of PwC) Liat Enzel-Aviel, partner and transaction services leader at PwC Israel. (credit: Courtesy of PwC)

Enzel-Aviel said that one cause of the phenomenon was the amount of available cash in the market, as well as large IPOs like ironSource, Taboola and others, which added more companies to the circle of investors.

“These companies designated M&As a major pillar of their growth strategy and directed lots of money toward this activity,” she said. “The considerations for acquisitions included, among others, rapid achievement of technological improvement, attainment of a competitive advantage in the market, expansion of market share, and creation of new markets.”

Looking to 2022, Enzel-Aviel predicted that more companies that become unicorns, as well as increasing amounts of available cash, will continue to fuel the market.

“The amount of available money, together with the low-interest-rate environment, the large appetite of investors, and the desire of companies to attain technological capabilities and competitive advantages will continue to feed the M&A market and the economic rehabilitation process, along with recovery from the crisis,” she said.