Exits in Israel totaled $7.44 billion in 2017 and the average exit was $106 million.
After a steep drop in all the exit indices in 2016, compared with 2015, high-tech exits recovered strongly in 2017. A report by the PriceWaterhouseCoopers (PwC) Israel accounting firm stated that Israeli high-tech exits totaled $7.44 billion in 2017, 110% more than the $3.5 billion in exits in 2016.
The figures exclude the acquisitions of Mobileye and NeuroDerm, which would have increased the value of exits in 2017 to $23.8 billion. These two acquisitions were already reported as exits in 2014, when the companies held their IPOs. The report also excluded exits of less than $5 million. 48% of the volume of exits in the report was in computing and software for corporations, including cyber technologies. Life sciences companies accounted for 23% of the volume of exits, Internet companies 12%, and communications companies 9%. Exits as a whole averaged $106 million.
The number and value of IPOs also recovered in 2017. 11 Israeli high-tech companies held IPOs on various stock exchanges in Israel, the US, Sweden, the UK, and Australia, raising an aggregate $414 million at an aggregate company value of $1.5 billion, a substantial increase over 2016, when only two companies held IPOs, raising $44 million. In 2015, on the other hand, there were eight IPOS in which a total of $3.5 billion was raised.
The biggest IPO this year was by ForeScout, which raised $116 million on Nasdaq in October at a company value of $814 million. "We expect this trend to continue in 2018, because the number of IPOs by technology companies will increase, including medical companies," PwC Israel writes. "Furthermore, in our opinion, new markets, such as the stock exchange in Canada and various Far Eastern markets, such as Hong Kong and Singapore, will also be an attractive option for an IPO."
The dispersal of deals during 2017 was not even. The first half of the year was a direct continuation of 2016, with only $1.9 billion in deals, but the second half of the year was completely different, with deals totaling $5.5 billion. Attempting to explain this, PwC writes, "Strong forces affected the local market at the beginning of the year, including Chinese governmental restrictions on investments by Chinese outside of China, the anticipated reform in the US tax regime, and possibly also the fact that following their substantial acquisitions in recent years, the buyers needed a reasonable time to digest them before going back for more.
"On the other hand, the amount of available money in global markets and an interest rate that is still negligible, even after several minor revisions, served as counter forces operating in the technology market's favor. It appears that these forces had an effect, tipping the scales in the second half of 2017, with no fewer than 55 different buyers during the year compared with 48 in 2016."
These explanations are only one element of the market trends, PwC Israel writes, adding, that things require assessment with a higher resolution. "The evolutionary trend in the image of the Israeli entrepreneur in recent years cannot be ignored. While it appeared in past years that the local entrepreneur was looking for a quick sale, it appears that 2017 marks the development that occurred in local technology companies. The year featured a larger number of deals with an average volume per deal of $106 million (excluding Mobileye and NeuroDerm).
"There were 11 acquisitions deals in 2017 with a value in excess of $250 million, while no fewer than a third of the total number of deals had values of over $100 million (compared with 15% of all deals in 2016). Another interesting figure involves the proportion of local acquisitions made by Israeli companies; there were 13 such acquisitions in 2017. Companies such as Gett, Innovid, Playtika, Radware Ltd. (Nasdaq:RDWR), and Top Ramdor Systems & Computers Co. (1990) Ltd. (TASE:TOPS) made acquisitions for an aggregate price of over $400 million, which unquestionably reflects the way they perceive themselves and, some will say, provides an indication of the future."