Why IPO's and not M&A?
In an earlier post, I discussed the possibility that Israeli companies would be switching from being targets for mergers and acquisitions (M&A) to
trying to do initial public offerings (IPO's) in 2014. At the time, I speculated that all of the M&A that has been done in the last 8-10 years has been motivated by impatience and by the desire to cash in quickly.
That may well be the case, but there is also a strong incentive for Israeli companies to try to maintain their independence, and that was driven home to me this evening by stories I heard about two local companies that have been bought by foreigners - one recently and one several years ago.
The Israeli corporate culture is very different from the culture in the US. In Israeli companies, employees aren't afraid to speak to their bosses as equals. They don't expect massive layoffs for efficiency or because the company was profitable last year, 'but not profitable enough.' They don't want their businesses driven by analysts' expectations and they don't want to live in constant fear that the company will downsize.
Foreigners who have come here and bought companies have often tended to take the parts they want and shut down (rather than sell - which would at least leave people with jobs) the rest. I know one Israeli company that within a month saw its entire local operation shut down, the entire company moved to the US, and all the Israeli employees (including the founder!) fired. I know another Israeli company where employees have been told that they have to work four times as hard because they will have half the employees and must produce twice the output.
Israelis don't work that way. We are a family-centered society. We like to be home with our kids in the evening. We don't work on holidays. And as long as we're earning decent salaries and our companies are profitable (even if 'not as profitable as expected') we tend to be happy.
The way to keep that culture seems to militate toward staying independent and 'going public' rather than selling out completely and placing our corporations at the mercy of purchasers from abroad who think nothing of laying off women the day after they give birth, forcing employees to take off for Christmas (not a holiday here) or freezing salaries so that a promotion just means that you work harder.
The Israeli mentality tends to be that if you want our technology but you don't want our people, you won't get our technology either.
Expect to see a lot more of that in the coming year.
JMHO (Just my humble opinion).
And PS - I do both public offerings and mergers and acquisitions.
Labels: initial public offerings, Israeli high tech, mergers and acquisitions
2014: The year of the Israeli IPO?
Will the two charts above be
reversed in 2014?
For years, Israeli startups chose M&A over the public markets.
That could start to change in 2014.
“I think 2014 will be the year for more IPOs,” said Nimrod Kozlovski,
a partner at Jerusalem Venture Partners. “The home run in Israel is if
you go IPO on Nasdaq, and I think that more companies in Israel now are
lining up, trying to go to Nasdaq.”
Mr. Kozlovski said the Israeli startup industry has matured to the
point of creating 15 to 20 companies that could launch an IPO next year
on New York, London or Tel Aviv exchange.
Wix.com’s IPO last month set an example for many of these firms and
increased the appetite to test the public markets. The website design
company launched the biggest U.S.-listed Israeli debut in years, raising
about $127 million. Its stock has already jumped roughly 70% from its
offer price, with the company hitting a market valuation of just over $1
billion.
The biggest reason why Israelis have tended to favor M&A (mergers and acquisitions) over IPO's (initial public offerings) in recent years is - in my opinion - a lack of patience. Everyone here wants to score quickly and that's much easier to do in the M&A market.
But we will see... And yes, I do IPO's....
Labels: Israeli high tech, mergers and acquisitions, public offerings
Israel on track for highest rate of M&A since 1994
This year is on track to be the largest year for
mergers and acquisitions (M&A) in Israel since 1994.
If
the current pace holds—40 Israeli companies have been acquired this
year—this will be the highest rate of M&A activity since 1994. Since
January 2011, acquirers have spent an aggregate $19.4 billion to
acquire 107 Israeli companies. Fifty-five of these companies were
venture backed and accounted for $12.8 billion in aggregate purchase
price. Interestingly, 21 of these companies were acquired by Apple,
Cisco, EMC/VMware, Facebook, GE, Google, IBM, Intel / McAfee and Salesforce.com.
The future looks robust as well, as venture investment in Israeli
companies in the first six months of 2013 alone totaled nearly $1.0
billion.
With
a current population of less than eight million people (fewer than, for
example, New Jersey, North Carolina or Virginia), you might wonder how
Israel generates such a track record. The fact is that there are
attractive acquisition targets all over the planet. EMC and others are
increasingly setting their sights on Israel because the companies we
find and the macro environment in which they operate can enable growth
and success at global scale.
...
Serial
acquirers have also recognized the opportunity that acquiring teams
with shared values, visions and missions offers the combined business.
As with many US-based companies, EMC, for example, has found in Israel
companies that not only have extremely talented engineers and
best-in-class technologies—we have also found teams that share our most
fundamental corporate mandates (integrity, absolute attention to
customer needs, ability to execute, etc.). That alignment enables
significant post-acquisition investment, growth and business success.
The
combination of intellectual horsepower, a fostering and innovative
culture and environment and values and motivations that are common to
those of many large multinationals is compelling for large acquirers
operating at global scale. In a world with few technology hubs with this
combination of attractive characteristics, Israel should continue to be
on the radar screen for any serious technology investor.
M&A is one of the areas where my law firm and I have a lot of experience and contacts in Israel and in the US, so if this is of interest to you, please be in touch off the blog. Labels: Israeli high tech, mergers and acquisitions
And again: Facebook buys an Israeli startup
I wonder whether they're going to try to
move the company out of Israel. Reportedly, no, they learned their lesson from Waze.
Onavo Ltd. is to become Facebook's first subsidiary based in Israel, at a price of about $100 million.
"TechCrunch" reports that Facebook Inc. has acquired Tel Aviv-based
Onavo Ltd., a developer of mobile app analytics solutions, for $100-200
million.
"AllThingsD" says, "Facebook will turn Onavo’s Tel Aviv
headquarters into Facebook’s new Israeli office, a first for the social
giant."
Onavo was founded in 2010, and develops mobile app analytics for marketers.
"Our
service helps people save money through more efficient use of data, and
also helps developers, large and small, design better experiences for
people," say Onavo's founders, CEO Guy Rosen and CTO Roi Tiger, in a
blog today. "We’re excited to join their team."
"Onavo will be an
exciting addition to Facebook,” a Facebook spokesperson told
"AllThingsD." “We expect Onavo’s data compression technology to play a
central role in our mission to connect more people to the Internet, and
their analytic tools will help us provide better, more efficient mobile
products.”
Facebook is known for acquiring companies and then closing them.
If you want to get in on the party, call me.
Labels: Facebook, Israeli high tech, mergers and acquisitions
Wow! Cisco buying NDS for $5 billion
NDS (which I can recall being called News Datacom) is probably the largest company in the Har Hotzvim office park in northern Jerusalem. Just about every high tech person I know in Jerusalem has worked there - or has tried to work there - at some point in time. Now, NDS is getting a new owner:
Cisco is purchasing NDS for $5 billion.
NDS was founded in 1988 in Jerusalem by a group of scientists from the Weizmann Institute of Science. The company specializes in the development of interactive systems for secure delivery of entertainment and information to digital TVs, digital set-top boxes, PCs and mobile devices. NDS also provides electronic security solutions for web applications.
Talks between Cisco and Premira, which owns 51% of NDS, and the News Corp group, which is controlled by Rupert Murdoch and owns 49% of the company, are in their final stages. The deal’s estimated value is about 35% higher than NDS’s value when it was delisted from the stock exchange in 2009.
...
The company’s flagship product is its encryption and conditional access system, VideoGuard, which is installed on home TVs via smartcards integrated into set-top boxes.
NDS’s solutions have been a magnet for foreign investors from its inception. In 1992, four years after it was founded, the company had its first moment of glory when it was acquired by News Corp for $15 million. In 1999, NDS achieved another milestone when Murdoch listed the company on NASDAQ.
Ten years later, the picture changed once again for the former Israeli company when the European Premira partnered with New Corp and the two acquired all of NDS’s outstanding shares for $3.7 billion. Following the move, NDS was delisted from NASDAQ.
Read the whole thing, and if you want to do some business, drop me an email.
Labels: Israeli high tech, mergers and acquisitions
