Mind the Tech NY 2022"Deals don’t fall through because of money, they fall through because of people"
Mind the Tech NY 2022
"Deals don’t fall through because of money, they fall through because of people"
"When you see the acquiring team, you see who they work with on a daily basis, and whether or not you want to work with them," explained CEO of Arya, Offer Yehudai
"Israeli companies are changing sides and moving toward acquisitions," said Timor Arbel-Sadras, CEO of LeumiTech, at the LeumiTech and Valley Bank roundtable hosted by Ori Kaufman Gafter, Head of International and Tech Banking at Valley Bank. "I think this will continue in the coming years for two reasons: The first reason is the decrease in value in public markets, and mergers and acquisitions is the best choice after an IPO; the second reason is the growth of Israeli companies. We are seeing strong companies that know how to grow by acquisitions."
Also participating in the roundtable were Asaf Peled, Founder and CEO of Minute Media; Shlomi Hagai, CEO of Clicktale, which was acquired by ContentSquare; Offer Yehudai, CEO of Arya and previous Founder and President of Inneractive and Fyber; Avner Mendelson, former CEO of Leumi USA and now vice chairman of Valley Bank following the merger between the two entities; Nitzan Shapira, former CEO of Epsagon, which was acquired by Cisco; and Sharon Barzik Cohen, CFO at Qumra Capital.
Roman Itskovich founder of At-Bay noted how his company acquired another startup but kept it independent. “We will not touch their culture," he said. Shlomi Hagai, founder of ContentSquare noted that: "Keeping two businesses independent is very difficult, and you have to find the best way to merge the two organizations in all respects. One plus one does not always equal three in mergers & acquisitions."
Sharon Barzik Cohen: "There needs to be a very organized process that connects people so they feel that they are still a part of a startup."
Asaf Peled: "You must give the acquired company the power to act independently. You have the ability to succeed however, if you want to control them by force, you will not be able to use them for change and the merger is likely to fail."
Offer Yehudai: "We were purchased by a German company that was bigger than us; however, we became its managers. We saw an unsuccessful company and a lot of duplications and we realized that it was necessary to cut back and change significantly."
Roman Itskovich: "If synergy is important, you may lose a large number of employees; however, that is part of the synergy."
Regarding red flags in acquisitions, Asaf Peled replied: "We handled many processes; however, at the end we decided to stop, even though we had approval from the board of directors. We discovered things in the process that surprised us in a bad way. You must not fall in love with your acquisition."
Offer Yehudai: "Deals do not fall through because of money, they fall through because of people. The bigger the team, the stronger the purchase and the higher price. When you see the acquiring team, you see who they work with on a daily basis, and whether or not you want to work with them.”
Roman Itskovich: "There are red flags in every transaction, but you always have to see how critical and central they are."
Ori Kaufman Gafter: "Although this year the volume of M&A transactions is lower than last year's record year, the expectation is for the M&A market to break records of the past 20 years. Historical data shows that companies that invest in developing strategies for periods of uncertainty, including through M&As, will be the big winners of the current period."