Year-End Survey of Investment Transactions in Israel

Posted in Investments, Israel, Mergers & Acquisitions, Technology

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With the 2016 fiscal year behind us, a number of reports that have been released in the past months provide a survey of the 2016 exits involving Israeli companies. The largest deal in 2016 that involved an Israeli company was the purchase of the Israeli tech company Playtika by the Giant Interactive Group from China for $4.4 billion. This was the second time in recent years that Playtika has been sold, as it was sold in 2014 to Caesars Interactive Entertainment, and thus certain surveys exclude the deal from their annual deal reports as there was no significant exit by Israeli shareholders, even though it is an Israeli company with Israeli employees. Some reports addressing capital raising activities consider 2016 to be a high water mark in terms of the dollars invested in Israeli companies.

According to the PwC Israel’s “2016 Hi-Tech Exit Report,” acquisition deals dropped from $7.2 billion in 2015 to only $3.4 billion in 2016 (excluding the Playtika sale). The report noted that many of the 2016 buyers were investors who were new to Israel and had not been active in Israel in 2015, and so it therefore seems likely that many previous buyers may be busy reaping benefits of their previous acquisitions and are not yet ready to make new investments. It also seems likely that the first-time buyers may be back in subsequent years to make additional acquisitions, as has often been the case with previous crops of new multinational companies who make acquisitions in Israel. The report also notes the uptick of Asian investors in the Israeli market, as evidenced by the Playtika deal.

A different recent report by the IVC Research Center valued Israel’s high-tech exits at $10 billion (this time including the Playtika sale), which includes 93 M&A deals and 3 IPOs. In a related press release to the report, Koby Simana, CEO of IVC Research Center, stated:

2016 was by no means sub-par. In fact, it proved better than the previous year in terms of the average exit multiple, and was one of the best multiples overall. This, coupled with the relatively lower volume of deals compared to 2015, suggests to us that entrepreneurs and investors may not be pushing for exits as they once did. Instead, it seems investors are looking closely into other alternatives. An opportunity to sell requires positive returns and substantial multiples, otherwise companies and investors choose to wait patiently, opting for company growth.

The report also focused on three prominent technology clusters that play an important role in the Israeli hi-tech market: adtech, cyber security, and automotive. These sectors have all seen several high-profile deals in recent years and it is expected that these sectors will continue to expand.

IVC Research Center also prepared a summary of capital raisings in 2016 which found that Israeli hi-tech companies raised an all-time high of $4.8 billion, which was an 11 percent increase above the $4.3 billion raised in 2015. The average financing round, which has been constantly rising over the past five years, reached $7.2 million in 2016, and most of the investment deals in 2016 involved later stage companies. In the words of Idan Nishlis, a leading legal marketer in Israel, in his Israel 2016 M&A Report, “the creative expertise and technological prowess in Israel’s high-tech sector once again shines through in recently published data, confirming Israel’s central role as a hub of innovation and a key factor in global M&A trends.”

Greenberg Traurig is the only major international law firm with a multidisciplinary, registered office in Tel Aviv and serves as a gateway for Israeli businesses and entrepreneurs seeking opportunities around the world, as well as for companies exploring opportunities within Israel. The Tel Aviv location offers clients the global reach of Greenberg Traurig’s international network, connecting Israel to major commercial centers across the globe. GT Tel Aviv is deeply involved in the hi-tech world and assists Israeli companies in raising money and increasing operations abroad as well as in connecting U.S., Chinese, and European investors with Israeli companies.

February 19, 2017: Calcalist Interviews Joey Shabot

Posted in Israel, Media Coverage

Operating shareholder of the Tel Aviv office was recently interviewed for the prominent Israeli economic journal Calcalist:

“Unlike other international law firms which usually have a minor physical presence in Israel, Greenberg Traurig’s local office employs eight attorneys in Israel. ‘Not only did we set up a platform in Israel’, says Shabot, distinguishing between GT and other firms, ‘but we have a whole team providing services to Israeli clients, in their own language and local business hours’.

Continue reading (Hebrew)


How Well Do You Know Your Co-founder?

Posted in Startups

Two co-founders, one CEO and one EVP.  One owned more than the other, got paid better, had bigger bonuses.  How did this happen?

“We were always very clear with each other about who would have what role,” the EVP once told me.  I observed that almost everything between them was consultative, even to a fault.  But for a tough call, if push came to shove, the EVP deferred and the buck stopped with his partner.  “We defined the roles and it has always worked for us.”

Yet, when representing start-ups, I often find that conversations over business fundamentals such as choice of structure, team recruiting, or tweaking a cap table will be greeted by an entrepreneur nervously wondering, “How am I going to break the news to my co-founder?”

The guy wringing his hands across the table didn’t fret while burning the candle at both ends to improve on the start-up business model.  He didn’t squirm when he quit his day job to bootstrap a risky venture.  He didn’t sweat when he and his co-founder shook hands.  But now, he’s afraid of allocating himself more shares of stock.

One such entrepreneur was running the entire operation.  One had made a substantial loan to the company.  One was dealing with unqualified co-founders whose presence would have violated any nepotism policy.  One had declined freelance work and was living with her folks.  One had paid the other a handsome salary in one business while they jointly plotted the spin-off.  But they all sometimes found themselves walking on egg shells when it came to having what they perceived as difficult conversations with their co-founders.

The television showבמטבח מהפכה  is a good example of this phenomenonOn the show, host אסף גרניט is brought in to a failing restaurant to identify the problems, help correct them, and hopefully turn it all around.  Sometimes it is a family member or friend that is somehow harming the business.  Curiously, nobody can quite bring themselves to identify the problems honestly when גרניט does his initial checking.  Finally, after the employees quietly signal what’s really going on, the main players have to go on television so that they can be pushed to have an adult conversation.

Are you nervous about your co-founder?  Will he be tempted by surer paths?  Are your complementary skills being strained? Are you making allowances? Are you hiding annoyances?

Perhaps you’re nervous about yourself?  Do you feel as though you are enjoying an undeserved wide berth?  Afraid your co-founder will bear a grudge?  Have your expectations changed?  Is there some romantic or other non-business alignment?

As seen through personal experience (and on במטבח מהפכה!), for the good of the venture, it is important to be able to talk about these things and your other feelings in an open and trusting way .  For starters, discuss about each person’s strengths and weaknesses.  Identify what actions and reactions he or she views as positive.  Figure out what really gets under her or his skin.  Compare management styles.  Come up with the areas where one person needs a counterweight or could simply benefit from support.

Naturally, it’s ideal to have such talks before deciding to partner with someone.  But it’s never too late to employ candid interactions to take your relationship to the next level.

Important News for Israeli Investors and Entrepreneurs

Posted in Immigration, Israel

In much anticipated news for both the United States and Israeli companies and entrepreneurs, Israeli nationals will soon become eligible for the E-2 Treaty Investor visas. The Israeli authorities have announced that the procedures and rules for the B-5 investor visa for U.S. citizens are expected to be released in March 2017. One of the vital effects of the B-5 visa implementation and availability is that it will enable the reciprocal availability of the E-2 visas for Israeli citizens.

The E-2 Treaty Investor visa aims to provide foreign nationals and corporate entities with a path to invest in the U.S. economy through reciprocal treaties of commerce. Where available, this visa option allows investors and employees of the same nationality to live in the United States and work for the U.S. enterprise.  In addition to the requirement that the majority ownership of the enterprise must be held by nationals of the treaty country, E-2 visa requirements include a substantial investment into the U.S. enterprise, as well as the entity’s growth and expansion.

President Obama first signed the legislation adding Israel to the list of approximately 80 other countries eligible for E-2 treaty investor visas in 2012. However, the implementation of this law was on hold, awaiting Israel to likewise ratify the treaty serving as the basis of E-2 eligibility. The reciprocal terms and conditions included the availability of a reciprocal visa path for U.S. investors to Israel. On Aug. 13, 2014, the Israeli Knesset ratified the necessary legislation to enable E-2 visa availability to Israeli nationals. Subsequent to the ratification, the Israeli authorities took additional time to confirm the details of the legislation and its implementation.

With the recent announcement that the B-5 investor visa procedures and rules are anticipated to be released in March of this year, the much anticipated E-2 Treaty Investor visa availability is expected to be released around the same time. GT will continue to provide updates on this key issue as they become available and is available to answer any questions regarding E-2 visa eligibility.

Upcoming Event: From “Start-Up Nation” to “Start-Up Region” – Making your Mark in Latin America

Posted in Event, Israel, Startup Nation, Startups

israelJoin Greenberg Traurig for a half day seminar in Tel Aviv, offering practical tools for Israelis seeking business opportunities in Latin America.


8:30 AM – 9:00 AM Registration & Networking
9:00 AM – 9:15 AM Welcome Remarks
9:15 AM – 9:40 AM Keynote (TBD)
9:40 AM – 10:40 AM Expert Panel: ‘They All Look Alike to Me’: Similarities and Differences between the Various Business Climates in the Region
10:40 AM – 10:55 AM Networking Break
10:55 AM – 11:20 AM    How Can Latin America Win The Competitive Race? by Gabriel Hayon, CEO, Israel Latin America Chamber of Commerce
11:20 AM – 12:30 AM Expert Panel: The LatAm Opportunity—Hot Sectors


Patricia Menéndez-Cambó – Vice Chair;Chair of Global Practice; Chair of Global Corporate & Securities Practice; Co-Chair of Global Energy & Infrastructure Practice, Greenberg Traurig, Miami

Gary Epstein – Co-Chair of Israel Practice; Senior Chair of Global Corporate  & Securities Practice; Tel-Aviv office Managing Shareholder, Greenberg Traurig, Tel Aviv

Gabriel Hayon – CEO, Israel – Latin America Chamber of Commerce

Mauro Berenholc – Partner, Pinheiro Neto Advogados, Brazil

Yosbel Ibarra – Co-Chair of Latin American and Iberian Practice,  Greenberg Traurig, Miami

Carolina Zang – Managing Partner, Zang, Bergel y Viñes Abogados, Argentina

Manuel Rajunov – Shareholder, Greenberg Traurig, Mexico

Jonás Bergstein – Partner, Bergstein Abogados, Uruguay

Freddy Fachler – EY Law international Division, Costa Rica

How Big Pharma Taps Outside Ingenuity

Posted in Intellectual Property, Life Sciences, Technology


Economics in getting a compound approved and commercialized are evolving. Drug companies have reduced budgets that historically funded vast R&D teams. Innovators are chasing tight investment dollars. The two camps are increasingly collaborating.

There is a self-selection factor rewarding start-ups — they can’t attract funding or licensing deals unless they’ve protected their intellectual property, showed clinically relevant data, recruited a credible advisory board, and/or received validation within the industry. Even then there’s plenty of risk. Product prospects fail more often than not and early-stage companies usually have all of their eggs in one basket. Indeed, investors worry that companies trying to pursue multiple compounds would lose focus.

For their part, Big Pharma can test promising compounds developed on the outside and try to reproduce results. As such, they can thoughtfully employ a “build” vs. “buy” analysis, deciding whether to go it alone or in-license (or otherwise acquire) given material. Even with the resources and expertise to get new ideas out of the lab and launched, established drug companies must figure out at what point licensing makes sense. There’s obviously greater risk at early stages of discovery. On the other hand, they’ll pay more for drugs that have already shown promise.

Happily, technology has enabled companies small and large to stretch their dollars. Huge new and open data sets together with relatively inexpensive high throughput computing identify genetic or other characteristics to achieve earlier targeting, better prospects, and even repurposing of previous failures.

So what does an exclusive licensing deal look like? Here are the basic elements:

  • Field of Use – Parties determine whether the license is limited to developing therapeutics for a particular disease and what activities a licensor can pursue outside of certain indications.
  • Up-Front Payments – These are usually paid on signing of the license and represent concrete value in the licensed compound; other payments are not guaranteed.
  • Milestones – Each step of advancement — whether filing a regulatory application, dosing the first patient in a clinical trial, or achieving the first sale in a given market — typically give rise to additional remuneration. Conversely, if a licensee discontinues development, there may be a mechanism for rights to revert and interim development to be licensed back.
  • Royalties – Payments are based on a percentage of net sales (sometimes per unit sold). Each deal varies as to the types of expenses, taxes and combinations that are included, and how and for what markets and periods thresholds are calculated.
  • Intellectual Property – The parties agree which has the right to register, enforce or defend IP rights and how costs and awards are split.
  • Reporting and Consultation – A committee often confers on the direction of, and each side’s continuing contribution toward, R&D.
  • Protections – can be a big-ticket deal. The parties must carefully craft legal and other provisions to anticipate issues that may arise in the future and apportion responsibility.

One of the terrific aspects of working with life sciences companies is the ability to witness ingenuity. Start-ups can bring great creativity to a problem. Successful drug companies achieve a balance between internal R&D capabilities and external deal making. Getting a drug to market benefits everyone.

Greenberg Traurig Hosts Reception Honoring New Consul General of Israel in Los Angeles

Posted in Event, Real Estate

Left: Sam, middle: Gary, right: Jeff

Greenberg Traurig’s Los Angeles office hosted a reception in honor of Sam Grundwerg to mark his appointment as Consul General of Israel in Los Angeles by Prime Minister Benjamin Netanyahu. Sam is the senior representative of the State of Israel to the Southwestern United States. Prior to this, Sam served as Director General in Israel for the World Jewish Congress (WJC). Before joining the World Jewish Congress, Sam was a real estate attorney at Greenberg Traurig and remains a good friend of the firm and many of its attorneys. The reception was attended by over 100 local business leaders, in addition to a number of Greenberg Traurig shareholders from the U.S. and Israel. Los Angeles Managing Shareholder Jeff Scott welcomed the new Consul-General to Los Angeles and spoke of the firm’s ties with, and support for, Israel. Gary Epstein, Tel-Aviv Managing Shareholder, Israel Practice Co-Chair, and Senior Chair of the firm’s Global Corporate & Securities practice, introduced the Consul General. In his remarks, Sam spoke of GT’s deep commitment to Israel, exemplified by its unique office in Tel Aviv. Greenberg Traurig is the only major international law firm with a multidisciplinary, registered office in Tel Aviv. The office serves as a gateway for Israeli businesses and entrepreneurs seeking opportunities around the world, as well as for clients exploring opportunities within Israel.

Size of the Option Pool in an Early Stage Company

Posted in Technology, Venture Capital

Israel blog postWe often counsel both early stage companies as well as investors looking to make venture capital investments in growth companies. One of the recurring issues is how the size of the company’s option pool should fit into the capitalization table of the company.

First, some background on an option pool: An option is a right to purchase a quantity of a company’s stock at a set price for a period of time (in an earlier post, I explained the difference between various types of options). The options provide the optionholders (usually the employees, officers, and directors) with the right to receive a form of equity of the company for a locked-in price (the exercise or strike price). Options have been proven to be an effective way to recruit, compensate, and retain talent in the company. The options are granted pursuant to an Equity Incentive Plan, which also provides for the maximum number of options that can be issued pursuant to the plan.

For an early stage company, the size of the option pool is typically around 10-20 percent of shares of the company on a fully diluted basis, depending on the specific hiring needs of the company. If there are a large number of executive or key employees to hire, the pool may be closer to the 20 percent range, and a times even increasing up to 25 percent. Subject to the hiring needs, the pool is usually increased with each significant equity financing. A recently published analysis by J. Thelander Consulting reviewed the size of the option pools of 200 companies, and found that they ranged from 10 percent to 18 percent.

The company should be mindful of the dilution of the other shareholders’ equity in the event that the options are exercised, and maintaining a reasonable cap on the size of the option pool may prevent excessive dilution. Investors should also consider the timing of the creation of the plan, as they may benefit by having the plan established before the financing round, as this will effectively lower the stock price of the shares of the company as the stock price will take the option pool count into account. For instance, if a company has 1,000 shares that have been issued to the founders and the pre-money valuation of the company is $100,000, the share price is $100. Assuming that in addition to the 1,000 shares, the company has an option pool of 200 shares, with a pre-money valuation of the company at $100,000, the share price is now $83.33, and the investor will prefer having the company be diluted prior to the investment.


As discussed in this summary, the size and timing of the creation of an option pool has ramifications on the evaluation of a company. With an international Emerging Technology practice consisting of attorneys around the globe, Greenberg Traurig is experienced in handling matters relating to venture capital financing for both entrepreneurs and early stage companies. For more information, please feel free to contact us.

Greenberg Traurig Attorneys Attend the Magen David Adom New York Gala

Posted in Event, General, Global, Israel

Greenberg Traurig attorneys turned out to support the Magen David Adom (MADA) gala in New York City.  MADA is Israel’s ambulance, blood-services, and disaster-relief organization, serving as emergency medical first response for the entire country.  Last night’s honorees including Mark D. Lebow, Patricia Harris, and Dr. Jason Nehmad, with special guest former New York City Mayor Michael R. Bloomberg.

Greenberg Traurig Team from Right to left Firm CEO Brian Duffy, Global Real Estate Practice Chair Robert Ivanhoe, Immigration Shareholder Kate Kalmykov, Bankruptcy Tax Group Chair Kenneth Zuckerbrot, Firm Vice-Chairman Richard Edlin, Tel Aviv Operating Shareholder Joey Shabot, Joshua Nulman, and Tel Aviv Real Estate Shareholder Lawrence Sternthal.

Greenberg Traurig Team from Right to left Firm CEO Brian Duffy, Global Real Estate Practice Chair Robert Ivanhoe, Immigration Shareholder Kate Kalmykov, Bankruptcy Tax Group Chair Kenneth Zuckerbrot, Firm Vice-Chairman Richard Edlin, Tel Aviv Operating Shareholder Joey Shabot, Joshua Nulman, and Tel Aviv Real Estate Shareholder Lawrence Sternthal.

Greenberg Traurig Attorneys Robert Ivanhoe, Joey Shabot and Brian Duffy with Dinner Honorary Chair Stella Amar-Cohen.

Greenberg Traurig Attorneys Robert Ivanhoe, Joey Shabot and Brian Duffy with Dinner Honorary Chair Stella Amar-Cohen.