Connect with us

Hi, what are you looking for?

Jewish Business News


Israeli high-tech exits at $10 billion in 2016; 12% up from 2015

IVC-Meitar High-Tech Report 2016: 93 M&A deals, 8 buyouts and 3 IPOs; $10 billion in exit proceeds, including the $4.4 billion Playtika deal

The Israeli High-Tech


2016 key facts:

• Average exits multiple: 4.34x, 5% above the 2015 figure
• Semiconductors led all exits, with $1.39B – 32 percent of total exits
• 27% of M&A deals involved Israeli high-tech companies on both the acquiring and acquired sides

Please help us out :
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at
Thank you.

Israeli companies closed 104 deals, totaling $10 billion in exits in 2016, according to the IVC-Meitar High-Tech Exits Report. The figure includes 93 M&A deals with a total value of nearly $8.8 billion including the $4.4 billion signPlaytika acquisition, eight buyouts that generated $1.22 billion and three small IPOs garnering $15.1 million.

The largest acquisition in 2016 was that of Playtika by Chinese online gaming company Giant Interactive Group, for $4.4 billion, following the $160 million acquisition by Caesars Entertainment in 2011. According to the report editors, since the two mega deals, Playtika in 2016, and NDS in 2012, each accounted for about 50 percent of total M&As, tend to skew up the data, they were left out of the M&As and IPOs analysis.

Adv. Alon Sahar, partner at law firm Meitar Liquornik Geva Leshem Tal, noticed: “Following several years of growth both in terms of deal numbers and their proceeds, 2016 presents an obvious slowdown. The analysis excluding the Playtika deal yields figures that are substantially lower than in previous years. It’s impossible to tell whether this is the beginning of a new trend or a natural correction due to significant hikes in previous years. We will need to wait a few quarters to see whether or not the market is facing a profound change.”

Looking at the majority of exit deals (excluding buyouts and the two megadeals), the average exit deal reached $46.3 million, 31 percent below the previous year’s average, which stood at $67.2 million, and 21 percent below the five-year average. However, “2016 was by no means sub-par, ” says Koby Simana, CEO of IVC Research Center. “In fact, it proved better than the previous year in terms of the average exit multiple, and was one of the best in multiples overall. This, coupled with the relatively lower volume of deals compared to 2015, suggests to us that entrepreneurs and investors may not be pushing for exits as they once did. Instead, it seems investors are looking closely into other alternatives. An opportunity to sell requires positive returns and substantial multiples, otherwise companies and investors choose to wait patiently, opting for company growth, ” says Simana.

Adv. Dan Shamgar, partner at Meitar Liquornik Geva Leshem Tal, provided additional arguments for this point in his statement: “Generally speaking, the low interest environment and high cash balance of strategic acquirers, as well as the growth demands of young companies, justify buyers’ continued interest in deal-making. We should hope that part of the explanation lies in the readiness of entrepreneurs and investors, against the backdrop of a certain slowdown on the buyers’ side, to show patience and implement a long-term growth strategy to establish more profitable companies and get higher valuations in longer periods. The availability of capital, especially this year, allowed companies to raise unprecedented amounts and somewhat undermined their readiness to sell companies.”

The average exit multiple – calculated as the ratio between capital invested in the companies prior to exit and the capital generated by the IPO and M&A deals – was at 4.34x for exits made in 2016, higher than the five-year average, though lower than 2014’s exceptional record of 5.29x. For VC-backed exits, 2016 ended with a 3.32x average multiple, second only to 2013’s 5.09x multiple.

The second largest deal in 2016 was the $811 million acquisition of EZchip by Mellanox. This deal, along with the Leaba acquisition by Cisco and Sony’s acquisition of Altair, established the semiconductors sector as a clear leader in 2016 exits, with an all-time record of $1.39 billion, 32 percent of total exits and over twice its average in the past five years.

As an aqcuisition where both acquirer and acquired companies were Israeli, the EZchip-Mellanox deal highlights another important trend in local M&As. According to the report editors, two sided Israeli deals have been gaining prominence over the past three years, with 27 percent of the M&As performed in 2016 involving local high-tech companies as both acquirer and acquiree. Like Mellanox, nearly 50 other Israeli companies have recognized the importance of corporate M&As as an inorganic growth mechanism and made at least one M&A deal in 2016, either in Israel or abroad. The result was an all-time record of $3.28 billion in M&A expenditures by Israeli companies, in addition to over $45 billion in M&A deals made by Teva Pharmaceuticals alone in 2016.

This year, the IVC-Meitar High-Tech Exits Report includes a new analysis focused on three prominent technology clusters – adtech, cyber security and automotive – chosen for their importance in understanding some of the trends in Israeli high-tech in general and their exits in particular.

According to the IVC-Online Database, there are nearly 420 Israeli high-tech companies operating in the adtech cluster in Israel, although numbers have been gradually dropping, due to market changes. In the past three years, 35 companies have been acquired or merged, five held IPOs (four in 2014) and one was acquired in a buyot , resulting in a total of $1.89 billion in exits. The largest deals during that period include the $200 million acquisition of Exelate by Nielsen and the $150 million acquisition of SuperSonic by ironSource, both of which took place in 2015. According to the report, the adtech cluster is losing momentum, as demonstrated by the drop in capital raising for adtech companies, making the cluster a prime candidate for further exits – particularly M&As.

Cyber security is one of the strongest technology clusters in Israel, and numbers suggest it will continue to be so. While capital raising for cyber security reached a record number – with nearly $700 million raised in 2016 – the number of exit deals and their proceeds have dropped. Fourteen Israeli cyber security exits were closed in 2016, garnering a total of $662 million, a sharp 48 percent drop, compared to 2015’s $1.27 billion in 20 deals. Average exit multiples for the cluster have also dropped, from 6.93x in 2015 to 5.54x in 2016, although still far above the industry average. The largest cyber exit in 2016 was the $293 million acquisition of CloudLock by Cisco, slightly below 2015’s Adallom acquisition by Microsoft, which closed at $320 million. The fact the cluster continues to generate superb returns, and the obvious interest from investors – including growth rounds and late-stage capital – means companies are not pressured to make exits, and that deals are closed only when they benefit both investors and entrepreneurs. With over 450 active Israeli cyber security companies today, this sector is likely to continue to expand, while producing individual exits.

The automotive cluster has been recieiving a lot of media attention over the past year or two, with companies like Gett on the local scene, and Uber on the global scene, making a splash, as the first autonomous cars are roaming the roads around the globe. While Israel’s automotive cluster is smaller than the other two mentioned above, with a little over 260 companies operating in the cluster, it has generated some serious interest worldwide. The cluster’s local leader is MobilEye, which logged both the largest buyout deal of $400 million in 2013, and the largest IPO, generating over $1 billion in 2014 while its market cap nearly doubled since. Another high profile automotive exit was the Waze $1.2 billion acquisition by Google in 2013. In 2016, six exit deals garnered a total of $205 million with a whopping 11.8x exit multiple average in the automotive cluster.
The full report is available HERE. A complete analysis of M&As and public offerings in 2007-2016 will be available in the IVC High-Tech Yearbook 2017, to be published in May 2017. Up-to-date information is available to IVC Industry Analytics subscribers.

The report summarizes exits of Israeli high-tech companies in merger & acquisition deals and initial public offerings, as well as buyout deals, from 2012 to 2016. VC-backed deals referred to in this report represent exit deals where at least one venture capital fund was involved as a pre-exit investor. In addition, the report analyzes M&A deals where Israeli high-tech companies were the acquirers over the same period.




You May Also Like

World News

In the 15th Nov 2015 edition of Israel’s good news, the highlights include:   ·         A new Israeli treatment brings hope to relapsed leukemia...


The Movie The Professional is what made Natalie Portman a Lolita.


After two decades without a rating system in Israel, at the end of 2012 an international tender for hotel rating was published.  Invited to place bids...

VC, Investments

You may not become a millionaire, but there is a lot to learn from George Soros.