from the April 2008 issue

IVC's 2007 Exit Report

The following summarizes the initial public offering and merger and acquisition activity of Israeli and Israel-related high-tech companies in 2007. The information is derived from the IVC Online Database. Israeli high-tech companies raised $701 million through initial public offerings on US, European and Israeli stock exchanges. IPO dollar volumes have been relatively stable in the past three years: $692 million was raised through IPOs in 2006 and $694 million in 2005.

Noteworthy offerings in 2007 include BigBand, Mellanox and Veraz, which raised $160 million, $117 million and $72 million, respectively. All three companies were listed on NASDAQ. VC-backed companies raised $538 million in 13 IPOs, including the three companies mentioned above.

M&A activity involving Israeli companies which were either acquired or merged totaled $3.2 billion in 2007 in 75 deals - the second highest number of M&A deals in any one year to date. Dollar figures for 2007 show a 67 percent decline from 2006's unusually high $10 billion, still the third highest dollar amount of M&A activity since 2000.

The most noteworthy M&A deals of 2007 were AOL's $363 million acquisition of Quigo; IBM's acquisition of XIV, estimated at $300 million; and NICE Systems' $280 million acquisition of Actimize. Mergers and acquisitions of VC-backed Israeli companies in 2007 totaled $1.9 billion and consisted of 32 deals.

According to IVC General Manager Guy Holtzman, "In times of uncertainty in capital markets, exits generally take place through M&A transactions rather than IPOs. Global technology firms with operations in Israel may well take advantage of the current economic situation and expand their local activities through acquisitions."

Israeli companies were also on the acquiring side in some 60 deals in 2007, including about 20 where one Israeli company acquired another Israeli company, and nearly 40 acquisitions of foreign companies. Israeli companies spent $2.15 billion on mergers and acquisitions in 2007, of which $1.96 billion was for acquisitions of foreign companies.

Reprinted from the Israel High-Tech & Investment Report April 2008

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