Tuesday, June 12, 2012

Buyout funds are growing their activity in Israel

Here at Goldrock Capital, as a tech-focused growth equity investor, one of our investment theses since 2008 has been the expected emergence of international and local buyout activity to complement the existing strategic M&A activity within the technology markets in Israel.

This activity is a growing reality in Israel and we expect the trend to spread throughout the market. Many institutional shareholders in Israel have been reluctant to embrace this liquidity event, since generally the feeling is that strategic acquirers pay more than private equity buyers. This of course is true. But since many Israeli technology companies are "sub-scale" for large strategic acquirers, often a recapitalization is best for the company to continue strong growth and access opportunities that would otherwise be closed off within their existing capital structure.

We look forward to this continuing trend! Below is a list of funds and their respective buyout / recap transactions (in parenthesis) over the past few years:

JMI Equity (Paradigm Geophysical - 2012)
Apax (Paradigm Geophysical - 2012)
TPG (iMDSoft - 2012)
Summit (Touro - 2008, Answers.com - 2011)
TA (Answers.com - 2012, Alma Lasers - 2007)
Battery Ventures (Direct Insurance - 2010)
Premira (Netafim - 2011)
Citi Ventures (Ness - 2011)
W Capital Partners (Conduit - 2012)
Taldan Capital (Teledata - 2012, Sintec Media - 2011)
Susquehanna (Netformx - 2009, Skybox - 2011)
Great Hill Partners (Plimus - 2012)
Francisco Partners (Attenti - 2009, Ex-Libris - 2008)
Vector Capital (Aladdin - 2009)
The Riverside Company (NovaMed - 2008)

An important common denominator on the above purchases is that there is seldom a venture fund invested prior to the buyout. We believe that will change and more venture-backed companies will partner with buyout funds in the future.

I am sure I may have missed a few. If i did, please add them into the comments.

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