Advisory co Landmark sees int'l demand for Israeli M&A

"They may not be home runs, but they may be the only option in this period."

While a crisis is not a particularly good time for technology service providers and consultants, Landmark Ventures, a US firm which operates in Israel, says that business is better than ever.

Landmark provides sales and strategy consulting services to start-ups and venture capital funds, including entering new markets, mergers and acquisitions, investment, and the raising of new funds.

"There's a sense of panic in the local market," says Landmark Ventures executive team member Ralph Klein. Klein's CV includes director of trading at ICC Corporation, director or international sales at ICD Group, and managing director of the Hong Kong office of PlexChem Technologies Pte. Ltd. He is a consultant numerous to companies, including Israeli firms NetManage Inc. (Nasdaq: NETM), Radware Ltd. (Nasdaq: RDWR; TASE: RDWR), and PowerPaper Ltd.

"Globes": Where do you see panic?

Klein: "Companies are beginning to realize that they won't keep their valuations. Some companies have already begun financing rounds, and midway, without being asked, slashed their company values. It's important for us to speak with companies because they don’t always have a grasp of matters like we do. It is really pressing when large companies lose half their value. However, small companies, if they have a good and interesting product that enables customers to save money, and improve their performance and competitive standing, have no reason to lower their valuations. Companies should think in terms of end users, not in terms of investment and venture capital."

Klein says that market giants now have an interest in investment and small acquisitions. "Large companies need to improve performance and cut spending, and they're seeking ways to do this. We're hearing clearly from large corporations that they're seeking products, companies for investment, and even acquisitions. For example, AOL executives told us that they want to make acquisitions for less than $25 million. IBM also believes that this is the time to buy companies, and Google is applying this strategy. They said that they'll continue buying small companies, and they're considering a number of acquisitions, even amounting to hundreds of millions of dollars, during the crisis. This is the order of day there: exploit the crisis to find bargains."

Venture capital funds won't like such small-scale acquisitions.

"True. They may not be home runs, but they may be the only option in this period."

Klein says that a major awakening is underway at companies, especially in the healthcare industry. "Israel has companies that are doing amazing things that meet real needs, which can save large companies a lot of money. Merck, Pfizer, and Novartis is sending clear signals: they're asking us to find companies for them, and we're working on six deals in Israel."

Israeli companies that work with Landmark include Comtec Ltd. (TASE: CMTC), InfoGin Inc., Neocleus Inc., PerSay Inc., Safend Inc., Sterna Ltd., TopTix Ltd., Traiana Inc., and YCD Multimedia Ltd.

What about 2009?

"The short term will be characterized by small acquisitions. I believe that we'll see a general change in thinking, and companies will return money to investors in unusual ways, not just by acquisitions or IPOs."

Published by Globes [online], Israel business news - www.globes-online.com - on January 6, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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