Israel tech exits surge 102% in 2019, reaching $9.9 billion
The past decade saw 587 exit deals — IPOs and merger and acquisitions — for a value of over $70 billion, PwC report says
Shoshanna Solomon is The Times of Israel's Startups and Business reporter
This year, 2019, was an “outstanding year” for Israel’s tech industry, with the number of exits — mergers and acquisitions or initial public offerings of shares — totaling $9.9 billion, a 102% jump compared to 2018, when the figure was $4.9 billion, according to a new report by consultants PwC Israel.
The figures do not include follow-on transactions — when companies that already had an exit have a second sale. Taking into account follow-on transactions, the total amount of deals (IPOs and M&As) for 2019 jumps to close to $23 billion, from $13.5 billion in 2018, the data shows.
Summing up the data from the past decade, the report said, there were 587 exit deals, for a total value of over $70 billion. When taking into account follow-on transactions — like Mobileye, Orbotech and others which had an initial public offering of shares and later were acquired, the last decade provided “a whopping $107.8 billion in deals,” PwC said in a statement.
The most prominent sectors for exits during the decade were semiconductor firms, computing, software startups and life science companies, accounting for 30.5%, 28.5% and 16.7% of deals, respectively.
The exit of the decade was Intel Corp.’s acquisition of Mobileye, a maker of self-driving technologies in 2017 for a whopping $15.3 billion.
Nvidia’s proposed acquisition of Mellanox Technologies Ltd. (the deal is still awaiting regulatory approvals) earlier this year made it the biggest deal for 2019, and the second biggest tech deal in Israel on record, after Mobileye. That, plus Habana Labs, acquired by Intel Corp. for $2 billion and Click, acquired by Salesforce for $1.35 billion, were the three biggest deals of 2019.
Looking back on the last decade, 2019 was the third best year in total deal value (after 2014 and 2015) and the best year in total number of deals, 80. In 2014, a record year for Israeli technology, the value of exit deals totaled some $14.9 billion, in 70 deals, and in 2015 this figure was $10.7 billion, also in 70 deals, according to the data. In 2010, the total amount of exits was valued at $1.1 billion.
The average deal size in 2019 was around $124 million in 2019, 51% higher than the average deal size in 2018, excluding follow-on deals in both years, the report said. The share of large deals remained high in 2019; the total number of deals bigger than $100 million was 24, or 30% of all deals, compared to 17 deals, or 28% of all deals, in 2018.
In 2019, US investors accounted for almost 60% of the total number of deals, with 48 transactions, followed by European investors with 15% and Israeli investors with 14%. Asian firms accounted for 6% of the total, with Canada and Australia making up the remaining transactions.
“Household names, including giants like Google, Samsung, Amazon and Palo-Alto, continued to shop for hot opportunities in the Startup Nation” during 2019, said Yaron Weizenbluth, Hi-tech Partner at PwC Israel, commenting on the figures. “The big tech firms were joined by buyers from diverse verticals, such as McDonald’s, SolarWinds, Vimeo, Stryker and many others, which were also on the lookout for deep and complementary technologies.”
The computing and software sector continued to lead the exits in 2019, with total value of deals reaching $4.5 billion, an increase of 92% compared to 2018. Other sectors that showed “significant growth” were the internet sector, following the IPO of Fiverr International Ltd. in June, and the semiconductor sector, following the sale of Habana Labs to Intel Corp. earlier this month.
The Life Sciences sector was third in size for exits this year: total deal value of life science deals reached $1.69 billion in 2019, though this level was stagnant compared to 2018.
“As the year is drawing to a close, it is fair to say that 2019 was outstanding for Israeli tech in terms of both deal numbers and value. In many respects, 2019 was an impressive feat and, by any measure, a fitting conclusion to a very successful decade,” said Weizenbluth.
The IPO market also rebounded in 2019, “after several relatively dry years, with three exceptionally strong IPOs on Nasdaq,” he said.
These were the share sale of cybersecurity firm Tufin, the online marketplace Fiverr and medical equipment maker Inmode.
The year was also marked by a strong presence of $1 billion deals.
“In recent years, we have become quite accustomed to having at least one 10-digit deal in the local market. And indeed, not less than five such deals were reported in 2019.” Not all of these firms were included in this latest data, as some of the companies had already been acquired or went public in the past, and follow-on transactions, or secondary exits, are not included in the figures.
“As we enter a new decade, it does not feel like the boom is about to end,” said Weizenbluth. “The 2020s are starting with a more supportive ecosystem for entrepreneurs that is stronger than ever. Add to that the evolution of Israeli entrepreneurs into players who are well versed in the global game and are confident in their ability to run long distances.”