September Edition 2022

26 Consequently, we have witnessed a significant portion of our clients, mainly foreign buyers looking for a toehold in the Israeli market, willing to pay considerable sums of money, as well as to compromise on some legal aspects of the deal, all in order to secure their desired transaction. It seems, however, as though we are witnessing reality twisting in a different direction, as recent developments indicate. As seen across the globe, high inflation rates lead state treasures and national banks to respond by increasing interest rates. Israel is no exception to this tendency (albeit to a lesser extent), with local interest rate increasing from 0.1% to 2% over the past five months. It appears that the end of the cheap money period may be approaching, with following sell-offs by investors and sharp downfalls in public companies' values, which may mark the trend reversal.Although a full assessment of the consequences of the new market trend on M&A deals seems somewhat premature at this stage, it can be carefully said that we are starting to see a shift in the pro-seller paradigm that has dominated the market in recent years. Nonetheless,we see that many of the relevant companies and investment funds still appear to have plenty of available cash for investment and an appetite for investing it. In addition, the Israeli industry, which is based on strong innovation and tech sectors, is expected to continue to be an attractive target for foreign investors, as technology innovation continues to drive the world economy. This leads us to believe that while we may see a temporary pause in investments while players revaluate the changing market and their increased costs of capital, a stagnation is not expected. Rather, we expect to see a continuance of the previous investment trends albeit with potentially different market characteristics. These characteristics are likely to reflect a more buyer-oriented market in which buyers might find themselves, in contrast to the investment atmosphere of previous years, in a better position to shape the terms of the deal in their favour. Buyers are also likely to benefit from a decrease in company valuations, which we expect to trickle down from public companies to private ones. Indeed, among our clients, we still see companies receiving diverse investment proposals even though the proposed valuations may be lower than their initial expectations. Likewise, we continue to help local and foreign investors to take advantage of attractive deal prices through investments in Israeli companies. We can already see the shifting market standards reflected in some of the recently published transactions. For example, the American private equity fund, Insight Partners, currently takes part in a USD 35 million equity financing of Bizzabo, an Israeli Hi-Tech company focused on

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