Our thinking

Outlook for M&A in Israel: Execs expect the bull run to continue

What's inside

Our third annual survey finds that a bullish outlook and the ascendance of domestic and Asian buyers could make 2019 a standout year


Israel had a stellar year for M&A in 2018. The country set a new record for value, logging US$26.5 billion over 103 deals. Such strong M&A activity may have come as no surprise to readers of last year's issue of Outlook for M&A in Israel. Indeed, 79 percent of executives we surveyed for last year’s report said that they expected to be involved in more deals in the year ahead than in the previous year.

Can Israel continue its M&A streak in 2019? That would be impressive, given that the country has set new records for value in every year since 2016. Both domestic and international politics are uncertain. And the global economy may be heading for a downturn—indeed, a number of economies are already slowing.

For the third year in a row, we conducted a survey to gain insight into the future of Israel M&A. In the first quarter of 2019, Mergermarket surveyed 51 senior-level executives at Israeli companies and private equity firms on their outlook for M&A. The survey included a combination of qualitative and quantitative questions, and all interviews were conducted over the telephone, by appointment.

Our research suggests that M&A will continue apace or even accelerate in 2019, as Israeli dealmakers enthuse about the current market.

Key takeaways from the study include:

  • Optimism about future dealmaking is stronger than ever
    More than three-quarters of survey respondents (76 percent) expect to complete more M&A transactions over the next 12 months than they did in 2018, with optimism about the level of deal activity remaining about the same as it was last year. Anxieties about the availability of financing have not affected confidence regarding dealmaking.
  • Global economic headwinds do not worry dealmakers
    More than three-quarters of respondents (76 percent) say a global economic slowdown would not make them less likely to engage in M&A. Some 37 percent say a slowdown would actually increase the chances of them doing a deal.
  • Expect domestic acquirers to dominate, Asian investment to rise
    In recent times, international dealmakers have dominated Israel’s M&A market, but respondents expect domestic acquirers to step up activity in the year ahead. More than two-thirds (69 percent) anticipate that Israeli private companies will be most active over the next 12 months. Respondents also anticipate an increase in the number of Asian acquirers as a proportion of the international dealmakers active in the country.


Israel M&A, by the numbers

Selected charts provide an overview of 2018 performance, including M&A value and volume, top deals, leading sectors and top inbound bidders.


Optimism about M&A is stronger than ever

Deals targeting Israeli companies hit an all-time high of US$26.5 billion in 2018, from 103 deals—an increase of 4.5 percent in terms of value compared to 2017. 

Global economic headwinds do not worry dealmakers

Many survey respondents are so confident about the prospects for M&A activity in the next 12 months that they do not view a possible global economic slowdown as an obstacle. 

Expect domestic acquirers to dominate and Asian investment to rise

The shift could be dramatic: In 2019, 69% of respondents predicted that private companies would be among the most active types of acquirers in the coming year, compared to just 23% who said so in 2018.


Four trends set to define 2019 and beyond

Our research suggests that M&A activity involving Israeli companies is set to remain strong during 2019 and beyond, despite potential challenges from slower global growth and both regional and international political volatility.

StockBoard Hero M&A in Israel

Expect domestic acquirers to dominate and Asian investment to rise

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Last year's cross-border inbound and outbound deal value total of US$20.4 billion was more than three times the domestic-only figure of US$8.1 billion. However, many expect a reversal in 2019.

The shift could be dramatic. Last year, just 23 percent of respondents predicted that Israeli private companies would be one of the two most active types of acquirers in the country during 2018. Just 12 months later, 69 percent forecast this group will lead the M&A charge during 2019. Similarly, 51 percent pick domestic publicly owned companies as M&A rainmakers for 2019, up from 22 percent a year ago. Israeli private equity firms are also expected to be busier. And this is borne out by the rising percentage of domestic deal volume in the past two years: In 2017, 40 percent of deals targeting Israeli companies were domestic, while in 2018 domestic deal volume hit 44 percent.


Respondents are much less likely to predict heightened activity from overseas companies, whether public or private—and just four percent think foreign private equity will be a major player in the Israeli M&A market during the coming year.

In part, this represents the growing strength of Israel's home-grown companies, which are ready to play a bigger part in the M&A markets. "We've seen over the past few years that Israeli private corporates now have an established technological advantage," says the CFO of one Israeli company. "Also, we've seen a boom in exports, with competitive technological sectors and communities growing rapidly."

Expectations of a shift from cross-border to domestic dealmaking are also likely to reflect concerns about the global market backdrop. If the global economy does slow, some investors may retreat from overseas expansion. If respondents are right about Israel's ability to manage such a setback with only minimal domestic impact, their propensity to engage in M&A should suffer far less.


As the US makes it more difficult for Chinese companies to invest in its technology sector, they are seeking alternative targets. Israel's strong tech industry is an obvious candidate.

Chinese up investment in Israel

Meanwhile, although cross-border transactions will not dry up, our survey suggests the nationality of bidders for Israeli companies may be set to change markedly. Some 43 percent of respondents think Asian acquirers are most likely to increase their dealmaking in Israel over the next 12 months, ahead of both North America and Europe.

Moreover, 59 percent of respondents predict the number of Asian bidders targeting Israeli companies will increase significantly over the next 12 months; a further 37 percent predict a moderate increase.

China will likely be the most significant player in this trend. According to the IVC Research Centre, Chinese investors were involved in 12 percent of all deals in Israel's high-tech industry in the first nine months of 2018. And in terms of value, the sums are increasing year on year—US$325 million was invested in 2018, up from US$308 million in 2017 and US$274 million in 2016. As the US makes it more difficult for Chinese companies to invest in its technology sector—as well as in other industries—they are seeking alternative targets. Israel's strong tech industry is an obvious candidate, particularly given the country's strategic location along the "Belt and Road" route to the West that China is pursuing.

"China is searching for advanced technology options and looking to invest in and acquire startups, for both their technology and talent," says the CFO of one Israeli company. "Now is a good time to take a look at Israeli companies."

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