15 Some caution has naturally set in “These are unique times for Israeli tech, which has demonstrated to date, and in line with historical performance, a high level of resilience to market conditions, but that is naturally facing market challenges similarly to all tech companies,” says Herzog’s Yair Geva. Strategic and financial investors are still looking at Israeli technology and other sectors but with caution. “As before, deals are driven by the potential technological edge, though investors are expected to be now more cautious,” says Amit Steinman, Corporate partner at S. Horowitz & Co. “This is particularly true with respect to assumptions about business models and they hold a more realistic view on synergies, as well as a careful view of capital costs, given these changing conditions.” “In 2022, economic uncertainty and rising interest rates have contributed to a significant slowdown in the global capital markets, with the technology industry among the most heavily impacted,” adds Lee Hochbaum, M&A partner at Davis Polk in New York. “However, given the track record of recent Israeli companies and the surplus of human capital, Israeli companies seem well positioned to capitalize when the markets reopen.” Douglas Getter, head of Dechert’s U.S. corporate practice in Europe and London, adds: “We continue to see strong interest in the Israeli tech sector, particularly related to financial services, payments and security, data collection, medical and non-regulated defence, but the downturn, rising interest rates and collapsing multiples have slowed things down on the sellside as potential sellers adjust to the new reality, and on the buy-side as investors have become more cautious.” Yariv Ben-Ari, partner, at New York based Herrick Feinstein, adds: "In light of rising interest rates and prevailing economic concerns, we have been working with our Israeli clients to identify market segments that will present opportunities for well capitalized buyers to transact across the US. While some lenders are more conservative, we have seen continued growth particularly where there are existing relationships with banks and PE funds.” Amir Zolty, partner at Lipa Meir & Co., adds: “We don't see a rush to invest. Yet, VCs and CVCs keep investing in promising start-ups with strong teams, be it at lower/more realistic valuations. We also see deep pocketed PEs looking for bargains at this day and age.”
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