Value of Israeli hi-tech exits soared by 102% in 2019

"In many respects, 2019 was an impressive feat and, by any measure, a fitting conclusion to a very successful decade," said PwC Israel hi-tech partner Yaron Weizenbluth.

A general view shows the urban landscape of Tel Aviv, Israel May 15, 2019 (photo credit: REUTERS)
A general view shows the urban landscape of Tel Aviv, Israel May 15, 2019
(photo credit: REUTERS)
The value of exits secured by Israeli start-ups more than doubled in 2019, capping a successful decade for the nation’s hi-tech innovation scene, according to a report published on Tuesday by the Israeli office of PricewaterhouseCoopers (PwC).
Exits in the Israeli market – IPOs, mergers and acquisitions and private-equity buyouts – soared by 102% during the past year, reaching a total value of $9.9 billion, compared to $4.9b. in 2018.
The sum excludes deals featuring companies that were previously acquired or had completed IPOs, including the large purchases of Mellanox by Nvidia and Lumenis by CVC, which would increase the total to $22.9b.
According to the PwC report, 2019 was the third-best year in total deal value over the past decade, surpassed only by 2014 and 2015. Since 2010, total acquisition value for Israeli hi-tech companies stands at $70b. across 587 deals. If follow-on transactions secured by companies including Mobileye and Orbotech are included, deal values soared to $107.8b. The unparalleled acquisition of Jerusalem-headquartered Mobileye by Intel in 2017 remains the largest deal secured by an Israeli company to date.
An unprecedented 80 deals exceeding $5m. were concluded during 2019, marking an increase of 31% since 2018. Excluding follow-up deals, average deal size skyrocketed by 53% in 2019 to the amount of $124m.
PwC Israel hi-tech partner Yaron Weizenbluth said that in many respects, 2019 was an impressive year and, by any measure, a fitting conclusion to a very successful decade.
“The household names, including giants like Google, Samsung, Amazon and Palo Alto, continued to shop for hot opportunities in the Start-Up Nation... In recent years, we have become quite accustomed to having at least one 10-digit deal in the local market. And indeed, not less than five such deals were reported in 2019.”
The IPO market “reacted and rebounded” in 2019, Weizenbluth said, after “several relatively dry years.” Three strong IPOs were secured on the Nasdaq Stock Market during the past year by online marketplace Fiverr, network security firm Tufin and non-invasive medical solution developer InMode.
The computing and software sector continued to lead the exits secured by the hi-tech sector, increasing by 92% in 2019 and reaching a total value of $4.5b. Propelled by the Fiverr IPO and the $2b. acquisition of Habana Labs by Intel earlier this month, the Internet and semiconductor sectors witnessed significant growth. The life sciences sector, the third largest sector in 2019, secured exits valued at $1.59b. but showed minimal growth compared to 2018.
Weizenbluth further explained the uniqueness of this situation.
“Israel continued in the 2010s to establish itself as a source of innovation, creating deep technologies across industries and verticals,” he said. “Yet, the most significant trend is happening away from public attention. This trend is about how the local tech market has evolved into a sophisticated apparatus in which entrepreneurs support and are supported within a tight professional ecosystem. Among those active in this environment are past entrepreneurs who have grown over the years into seasoned and daring executives of successful global companies.”
While the hi-tech sector continues to reach unprecedented heights, Weizenbluth did warn of doubts caused by the “very high valuations of tech firms.”
“This is coupled by a trend, whose impact is not fully known at this time, of a worrying drop in funding raised by early-stage start-ups... This might be an indication that investors are running to safety due to concern around the fate of the global economy.”
Nonetheless, Weizenbluth positively described the evolution of the Israeli entrepreneurial environment.
“If at the beginning of this decade the Israeli entrepreneur was blamed for selling too quickly, it appears just 10 years later that local players are much more self-assured and willing to march longer distances before taking a strategic decision.”
US firms continued to play the lead role in the exits of Israeli companies as they secured 60% of all deals, amounting to 89% of the total value of exits. European companies were involved in 15% of exits, and Asian firms secured a further 6% of all deals.