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

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

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Foreword

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.

 

Colin Diamond
Partner, New York

Daniel Turgel
Partner, London

 

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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.

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Survey

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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. 

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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. 

Read More
stockboard_square_tl_ma_israel_800x800.jpg (

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.

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Conclusion