Opinion
Acquisitions are back in fashion and outpace IPOs and independent growth
"In today’s reality, acquisition is often preferable to an IPO or betting on long-term independent growth. Not because companies are "giving up", but because they are operating in an environment where the rules of the game have changed," writes Nimrod Rozenblum, Managing Partner and Head of the Corporate and M&A Department at Epstein Rosenblum Maoz (ERM).
Against the backdrop of current market conditions in Israeli tech, marked by a sluggish IPO landscape and a record number of high-value acquisitions, Israeli startups seem to favor certainty, secure returns, and a strategic partner over the long and uncertain journey to Wall Street or long-term independence.
The sale of Israeli Fintech Company, Melio, acquired by New Zealand-based Xero in a deal exceeding $2.5 billion, joins a series of record-breaking M&A transactions of Israeli companies over the past year. The sale of Next Insurance to Germany’s Munich Re for $2.6 billion last March, and even the signed and yet to close $32 billion acquisition of Wiz by Google, reflect the same market trend: A growing preference for strategic acquisition over a Wall Street IPO or clinging to the long-term dream of building a large, independent company.
High interest rates, a faltering IPO market, declining valuations of public companies, and the difficulty many late-stage startups face in justifying the valuations at which they raised capital during the boom years (which, for many sectors, ended in 2023), have made acquisition the preferred option for many. For Melio, for example, the IPO route or pursuit of independence would have required continued aggressive growth and massive fundraising rounds involving dilution and high risk. Conversely, the acquisition provided a guaranteed and generous premium—advantages that the public markets currently struggle to offer.
The data supports the trend. Deloitte’s and PwC’s reports show that Israel’s M&A market expanded by roughly 35% in 2024, reaching a total transaction volume of approximately USD 20 billion (exclusing the sale of Wiz). In the technology sector alone, 81 transactions were logged, 25 of them in cybersecurity—a domain that continues to deliver high-demand, cross-border exits. The average deal size surged by a 51% YOY (year-over-year), with most investors being strategic players or private equity firms targeting companies with revenue, customers, and robust technological infrastructure—not aspirational ventures.
Mergers Make a Comeback
The Israeli uptick aligns with a broader global trend. In the first half of 2025, the global M&A market reached nearly $2 trillion, a 20% increase compared to the same period last year. According to Bloomberg data, more than half of the large-scale transactions involved the acquisition of private companies—a relatively rare phenomenon over the past decade.
Notable deals include Meta’s $14 billion acquisition of Scale AI, the merger of cable companies Charter Communications and Cox Communications, and from an Israeli perspective, Google’s acquisition of Wiz. These are all mega-deals—often exceeding $30 billion including debt—of non-public companies, all signaling the same global pursuit of innovation backed by revenue.
One factor driving the recent surge in deal activity is a shift in the United States administration’s stance on antitrust enforcement. Unlike the uncertainty of previous years—which often hindered large-scale acquisitions—the regulatory environment in 2025 under Trump has shifted. A return to more traditional enforcement practices has fostered a greater sense of stability, encouraging corporations to move forward with mergers.
This month, for instance, the Federal Trade Commission (FTC) approved a major transaction: Omnicom, one of the world’s largest advertising firms, acquired its competitor Interpublic for $13.5 billion—a deal that had previously stalled due to regulatory obstacles. The move has reinforced growing optimism in the M&A market. What was once seen as a protracted and cumbersome process is increasingly viewed as a viable, even strategic, path forward—fueling expectations of continued momentum in the second half of the year. According to various reports, this softer regulatory climate also played a role in the renewed talks between Wiz and Google which ultimately led to the deal being signed.
Conversely, the IPO market continues to stagnate. Despite a modest recovery, valuations in the public market remain uncompetitive relative to offers on the table from major acquirers. eToro’s IPO on Nasdaq, at a valuation of $4.3 billion, stands out—but it is the exception that proves the rule: a company with an established brand, nearing profitability, a consumer-facing product, and positive exposure to the crypto space. Even so, it was forced to reduce its valuation from initial targets and conduct a private fundraising round in advance.
Unlike most Israeli tech companies that enter the growth stage still heavily reliant on additional funding, often paired with volatile margins, eToro approached its IPO with a clear strategic direction and capital in its coffers. In other words, its listing does not signal a broadly open IPO market, but rather illustrates that with a standout business profile, access remains possible.
The conclusion is clear: In today’s reality, acquisition is often preferable to an IPO or betting on long-term independent growth. Not because companies are "giving up", but because they are operating in an environment where the rules of the game have changed. As long as interest rates remain high and uncertainty persists, buyers will continue to lead the market, and exits will return—even if under different names.
Nimrod Rozenblum is Managing Partner and Head of the Corporate and M&A Department at Epstein Rosenblum Maoz (ERM).
