from the February 2014 issue

Do not take an early exit

If there is any criticism of the Israeli high-tech scene it is the proclivity to "exit" too early. Managers will accept $50-$100m. instead of allowing companies to mature and obtain a higher reward. This phenomenon is generally related to a desire for early wealth. If a company is valued at $100m. it is very likely that it has the potential to grow to a much larger size.

Looking into the background of Israel's largest companies it becomes apparent they have been either founded or led by individuals having a vision of creating a large company. None of them planned on an early "exit".

Individuals, who nurtured small into large companies meriting attention include Efi Arazi, founder of Scitex, Stef Wertheimer, founder of Iscar that was later acquired by Warren Buffet for $4b. Gil Schwed who founded Check Point Software and Eli Hurwitz. Teva Pharmaceuticals, which was founded on the basis of a combination of several small pharmaceutical companies grew as the result of the brilliant leadership of Eli Hurwitz who thought in terms of expansion but not in selling the company.

It is unlikely that the phenomenon of early exits will cease or even slow down. Israeli entrepreneurs prefer to have money in their own accounts than shares that may have substantially higher values at some future date.

Reprinted from the Israel High-Tech & Investment Report February 2014

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