In 2018, exits activity in Israel reached $12.63 billion in 103 deals, including four large deals, each over $1 billion: Orbotech - acquired by KLA-Tencor for $3.4 billion (subject to closing); Imperva - acquired by Thoma Bravo for $2.1 billion; Mazor Robotics - acquired by Medtronic for $1.6 billion (Subject to closing); and SynaMedia (formerly NDS) - acquired by Permira for $1 billion.
The total number of exit deals fell slightly to 103 compared with 133 in 2017. According to the IVC-Meitar 2018 Exit Report, the decrease is due to a decrease of deals of $20 million and below.
In 2017, the IVC-Meitar report found $7.7 billion in exits although this did not include the $15.3 billion acquisition of Mobileye by Intel
Meitar Liquornik Geva Leshem Tal & Co. partner Adv. Shira Azran said, "The aggregate value of the exits in 2018 was significant, approx. $12.63 billion. A closer look at the data reveals mixed trends. On the one hand, four exits exceeded $1 billion and these deals have become part of the industry. On the other hand, during 2018 we saw a decrease in the number of exits of private companies between $ 250 million and $ 1 billion."
Azran added, "An examination of the investment data indicates an increase in 2018 in general, and in particular, the number of large-scale investments in growth companies increased significantly. For example, the number of companies raising amounts of more than $30 million, rose to a peak of 62 transactions in 2018. This combination of a significant increase in the volume of investments in growth companies and a relative stagnation in exits value, highlights the fact that Israel is building a strong and significant infrastructure of companies that in the coming years will examine their ability to reach an exit that reflects a significant return to investors".
While venture capital-backed deals remained at stable levels in 2018, a significant drop of 58% was noted in the non-venture capital-backed exits.
2018 IPO and Buyout numbers retained their historical ranges. Five Israeli life science companies completed their IPO in the US, raising an aggregate of $246 million. Three Israeli companies completed an IPO in Australia, raising a modest $12 million.
M&A values in 2018 totaled $11.1 billion compared to $6.3 billion in 2017 although M&A numbers dropped 20% from 111 to 89 transactions in 2018. The four large exits above $1 billion counterbalanced a decline in the number of exits in the range of $250 million to $1 billion, from five in 2016 and eight in 2017 to just three in 2018.
IVC Research Center CEO Benzi Segev said, "The Israeli startup landscape in 2018 took another step in the global direction of more money funneled into less deals. This pattern was noted on both sides of the tech deal activity - M&A and funding. Looking 12 to 18 months ahead, the fundamentals for long term growth already exist-amounts and numbers of large investments are on the rise, but it remains to be seen if the local scene could use these resources to grow."
According to the IVC-Meitar Exit Report, in 2018 there were 34 venture capital-backed companies reaching an exit after more than five years of activity, similar to the level in the last five years for venture capital-backed exits. However, the number of non-venture capital-backed companies that reached an exit in less than 5 years since establishment decreased nearly 60% in 2018, to only 15, compared with 34 and 36 in 2016 and 2017, respectively.
In 2018, the number of life sciences companies with exit activity continued to grow (24 deals including 7 IPOs). Exit values kept to the same level as 2017, reaching $2.98 billion. While the number of deals in the IT and software sector remains stable, the value of 2018 exits increased to $4.49 billion from $3.31 billion in 2017.
AI (Artificial Intelligence) exit values soared in 2018 mostly due to the Datorama deal ($850m), reaching $1.15 billion, almost four-times higher compared to $307 million in 2017. The number of AI exits remains in historical figures. Cybersecurity exit values in 2018 set a record - $2.81 billion in 12 deals compared with $1.35 billion in 14 deals in 2017.
Published by Globes, Israel business news - en.globes.co.il - on January 15, 2019
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