Israel Transactions Insights - Fall 2020

Kroll Senior Advisor Efraim Chalamish shares timely insights on the deal and sector landscape in Israel

The COVID-19 pandemic and resulting restrictions will likely decrease Israel’s real GDP by more than (7.0%) in 2020 after a decade of robust growth. Unemployment reached a peak of 4.56% in 2Q 2020 as business grappled with uncertainty and mandated closures. These shutdowns, including in the hard-hit services industry, drove the spike in jobless claims, with 88% of claims in April 2020 related to temporary furloughs or terminations.

Despite the economic impact of COVID-19, Israel’s economic position remained resilient internationally. Israeli currency has become one of the strongest globally and Israel had the eighth lowest unemployment in the OECD in August of 2020.

The technology sector had an increased productivity rate compared to the wholesale and retail sectors, as brick-and-mortar stores shut their doors, while remote working and e-commerce trends accelerated. Israeli technology targets continue to lead M&A transaction activity for the year. As Israel faces a second lockdown in September 2020, recovering sectors may recede and acquisition activity may decline.

Israel’s government continues to monitor the impact of the COVID-19 pandemic and has responded accordingly through economic relief programs. Specifically, the Bank of Israel has extended the payment of loans, provided economic stimulus packages, reduced the interest rate, provided unemployment relief and postponed tax deadlines.

In 2019, 155 M&A transactions were completed, an increase from the previous year in both quantity and deal value.

In 2020, there have been a total of 86 M&A transactions closed YTD, predominantly in the technology sector.

Source 
Company press releases, S&P Capital IQ, OECD, KPMG Global Report, Bloomberg