Israeli Tech M&A Deals Hit Record High
Israel’s tech scene is on fire with record-breaking mergers and acquisitions this year. According to a recent report from Vintage Investment Partners, M&A deals hit a new high of $10.5 billion, up 22% from the previous peak in 2021.
Managing partner at Vintage, Asaf Horesh, highlighted the significant involvement of international buyers, accounting for 78% of all deals. Standout acquisitions this year include SAP’s purchase of WalkMe for $1.5 billion and Permira’s acquisition of BioCatch for $750 million. Additionally, major players like Microsoft and Applied Materials have reignited their acquisition activity in Israel after a two-year slowdown.
On the flip side, the venture capital sector in Israel is experiencing a shift. While the number of new funds decreased by 35%, the average capital raised per fund surged from $125 million to $202 million. Horesh mentioned a trend of consolidation in the sector, with investment institutions favoring larger funds with a proven track record.
Another interesting finding from the report is the 25% increase in new companies founded by experienced entrepreneurs. These changes have influenced investment patterns, with aggregate capital raised by companies decreasing by 12%, but the average amount per deal rising by 37%.
No surprise, artificial intelligence remains a key player in driving market growth. The report shows that AI investments accounted for 41% of the total amount of deals in 2024, up from 26% in 2023. Horesh attributes this growth to young AI companies securing substantial funding early on, mainly to cover the costs of expensive computer infrastructure.
Vintage’s report relies on data from research firm PitchBook and Israel database IVC, covering over 4,000 investment funds and approximately 33,000 companies. The figures are updated through September 2024, with forecasts for the final quarter based on specialized models that consider reporting time lags. All deals are converted to US dollars for comparison.
In conclusion, Horesh noted that the Israeli tech market is maturing, emphasizing a shift from rapid growth to sustainable expansion. The peak in M&A deals reflects the industry’s strength and maturity.
Adv. Guy Lachmann from the Pearl Cohen law firm’s Hi-Tech Practice Group, who attended the report unveiling, praised the quality of Israeli technology. He highlighted the investment opportunities beyond cybersecurity but acknowledged some challenges for European and Asian investors. Despite some complexities, investment deals are ongoing, with new opportunities emerging at cautious valuations.
Overall, the Israeli tech industry is buzzing with activity, showcasing its resilience and attracting global attention.
