The average exit value in the first half of 2019 set a five-year record.
In the first half of 2019, high-tech exit activity in Israel reached $14.48 billion in 66 deals, a five-year high according to the IVC - Meitar report. This amount included one mega-deal in which Nvidia acquired big data connectivity chip developer Mellanox Technologies Ltd. (Nasdaq:MLNX) for $6.9 billion (subject to closing). Excluding the Mellanox deal, total exit value reached $7.58 billion in the first half of 2019.
Despite a slight decrease in the number of exits (which include: IPOs, M&As and buyouts), from 73 exits in the first half of 2018 to 66 exits in the first half of 2019, the total exit value in the first half of 2019 increased significantly from $6.49 billion in the first half of 2018 to $14.48 billion in the first half of 2019.
The average exit value in the first half of 2019 set a five-year record, reaching $116.6 million, almost double compared with $63 million in 2015 annually.
Meitar Liquornik Geva Leshem Tal Law Firm partner Adv. Shira Azran said, "In the first half of 2019, we witnessed a significant increase in the total volume of exits, particularly those with a value exceeding $100 million. We identify a similar trend in transactions that are currently under negotiation. There is a large variety of buyers, and, in some cases, the purchase price is not only a function of an assessment of the value of the acquired technology, but also a determination of value based on revenue and profitability levels of the acquired company as a reflection of the maturity of the acquired companies."
Azran also referred to the increase in the number of growth companies raising large amounts of capital in recent years, and the high expectation of investors for a significant return. She said, "Therefore, the increase in the value of exits is also consistent with the expansion of the backlog of mature companies. On the other hand, due to the constant increase in the volume of investments, it is too early to assess whether these companies will succeed in fulfilling investor expectation."
Four IPOs were completed in the first half of 2019, with two sizable companies (Fiverr and Tufin) listed on Wall Street and raising significant amounts. Meitar Liquornik Geva Leshem Tal Law Firm partner Ad. Itay Frishman said, "The two successful IPOs in the US are likely to generate interest among more Israeli companies that will want to examine initial public offerings as a path to exit and liquidity. Naturally, an examination of these trends in a semi-annual period is limited, but we feel that a significant number of the exits in the first half of 2019 accomplished the investment model of investors and founders. We will need to wait for the full year’s results to evaluate this period compared with previous years."
In the first half of 2019, the number of deals between $100 million and $1 billion climbed to a record of 23 (16, excluding public companies and companies with a prior exit) compared with 18 deals in 2018 (or 16, excluding public companies and companies with prior exit).
An analysis of private companies with first-time exits shows that in the first half of 2019, the value of exits in the range of $100-$250 million soared to $1.89 billion. Exit values in the range of $250-$500 million increased to $1.06 billion in the first half of 2019 compared with $1.04 billion in 2018 annually.