Israeli startup companies were sold for a total of $3.32 billion in the first six months of 2016, according to the IVC-Meitar Exits Report released today by IVC Research Center and Israeli law firm Meitar Liquornik Geva Leshem Tal.
These ‘exists’ span 45 deals in which high-tech companies were either acquired, or merged with other companies. Four buyout deals (the purchase of a controlling share in a company) accounted for an additional $878 million, hiking up the total to $4.19 billion.
The figure is 21 percent lower than the $5.3 billion reported for the first six months of 2015. In all, 2015 was a fertile year for mergers, acquisitions and IPOs (initial public offerings on the stock exchange), when Israeli high-tech and startup companies were sold for a whopping $9.02 billion.
Despite the sharp decline in overall proceeds from acquisitions, the average ‘exit’ deal in the first half of the year – that is, the average sale price of each company – was $86 million (including buyouts), nearly 12 percent above last year’s $77 million, which means Israeli companies are getting much higher valuations now.
The largest deal in the first half of 2016 was the $811 million acquisition of EZchip by Mellanox, both Israeli companies. Mellanox Technologies is a supplier of end-to-end connectivity solutions for servers and storage, which optimize data center performance. It was founded in 1999 by Eyal Waldman, Shani Cohen and Roni Ashuri.
Another significant deal was the $643 million buyout of XURA (formerly Comverse), an Israeli company that provides digital communications services, by New York-based investment fund Siris Capital.
The $430 million acquisition of Ravello Systems by software giant Oracle was the third-largest deal. Ravello is an Israeli ‘cloud’ software startup founded in 2011 by Rami Tamir and Benny Schnaider.
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2016 has so far seen only a single IPO – that of Trendit, which raised $5.9 million at a $17.6 million valuation on the London Stock Exchange. The data reflect a sharp drop compared to the $609 million in IPOs in 2015. According to IVC, “the international IPO markets have been unfavorable since late 2015.”
Capital raising expected to grow
It’s no secret that the exits market has slowed down in recent months; it is estimated that by the end of 2016, 100 exit deals, with a total of approximately $7 billion in proceeds, will have closed – well below the $9 billion proceeds generated in 2015.
According to Koby Simana, CEO of IVC Research Center, “our projections reflect a decline in exit volumes, since we believe companies are using the current market atmosphere to focus on growth rather than on exits.”
The good news is that capital raising in the first half of 2016 – a report due in the next few days – is expected to show increased investments in Israeli startups.
Infographics: IVC Research Center