- Average exit in H1/2015 was 51% above the 2014 average
- H1/2015 is the second strongest half year for M&A activity in six last years
- Temporary slowdown in IPO activity – only 6% of total exit proceeds in H1/2015
In the first six months of 2015, Israeli high-tech exit activity accelerated, garnering $5.29 billion in 54 deals – nearly 76 percent of the total proceeds from exits in all of 2014, with 107 deals totaling $6.98 billion, and 80 percent of $6.62 billion in 91 exits in 2013, both considered part of the few most successful years for Israeli exits (Chart 1). The figures published today are part of the IVC-Meitar Exits Report H1/2015.
The average deal size was $98 million, 51 percent more than the annualized average of $65 million in 2014 and 34 percent above $73 million in 2013. The average VC-backed exit in totaled $84 million, a 15 percent increase from the 2014 average, while non VC-backed exits jumped 80 percent from an average of $60 million last year to $108 million in the first half of 2015.
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Dan Shamgar, partner at law firm Meitar Liquornik Geva Leshem Tal, noted, “”The first half of 2015 featured robust M&A activity across the industry, and the second half is already looking promising, with a pipeline of meaningful transactions in the works. We are experiencing growth both in the number and variety of potential buyers showing interest in Israeli companies, and in the variety of target companies – that are more mature and ambitious. In addition, investors in Israeli companies continue to be selective in defining the exit path and are willing to be patient in order to maximize value. We are optimistic about H2/2015.”
Almost 24 percent of the total exit value was due to the $1.25 billion acquisition of FundTech, an enterprise applications company, by multinational fintech company D+H. Five out of the ten largest acquisitions (all greater than $100 million) were software-related.
The report revealed that M&A deals accounted for a significant part of the H1/2015 increase in exits. Proceeds from mergers & acquisitions of Israeli and Israel-related high-tech companies totaled $4.98 billion in 48 deals, exceeding the 2014 aggregate of $4.93 billion, partly due to the FundTech acquisition. In terms of the number of deals, totaled 55 percent of the annual average M&A deal-making in the previous five years. (Chart 2)
The average M&A deal was the highest in six years, at $104 million, second only to 2012, when Cisco Systems acquired NDS for $5 billion. Deals in the $100-500 million range accounted for 54 percent of M&A proceeds, explaining the high average, unlike 2012 figures, when the exceptional NDS deal accounted for the increase in total proceeds.
Koby Simana, CEO of IVC Research Center said, “In the first half of 2015 we saw company valuations at exits rising significantly and quickly, with 11 deals above $100 million each, compared with 17 such deals for the full year 2014. Such high-value deals are clear evidence of the availability of more acquisition capital, as well as of the fact that more companies and investors have been working on growing companies longer, thus providing the market with more mature potential acquisitions, which receive better, higher valuations. On top of that, ” he added, “we’ve been tracking more and more international technology companies and conglomerates from markets outside the US – particularly Asian and European corporations – who join the expanding pool of potential buyers of Israeli high-tech companies. Such new players are bringing with them an influx of new capital and growing international interest, driving up company valuations even further, ” concluded Simana.
Israeli high-tech IPO activity has continued, with six companies going public. The direct proceeds from the IPOs were somewhat modest, at $308 million, only six percent of total exit proceeds in H1/2015, compared with $2.1 billion (29 percent share) raised in 16 IPOs in 2014 as a whole. Only two of the six companies that went public were venture-backed, compared with 2014, when more than half of the IPOs were by VC-backed companies.
While IPO activity to date peaked in 2014, more than 20 Israeli companies are currently planning to go public in 2015 – 2016, and three to four IPOs are scheduled to take place by the end of the year, for a total of up to $500 million.
The IVC-Meitar Exit Report also reveals that acquisition activity by Israeli high-tech companies continued with 24 Israeli high-tech companies closing a total of 32 acquisition deals of both local and foreign companies in order to fuel expansion efforts.
Chart 1: Total Exits 2010-H1/2015
Chart 2: Israeli High-Tech M&As 2010-H1/2015
