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2015 and possibly the coming years are likely to follow in 2014’s lead. Israel’s upper
hand advantage as a leading force in the fields of cyber-security, Internet of Things
and big-data analytics, should secure the interest of foreign investors worldwide.
Moreover, the movement surrounding the natural gas developments in Israel is likely
to attract additional investment interest to Israel in the coming years.
The Israeli economy is a vibrant place for transactions. The local culture in Israel plays
a significant part in the thriving marketplace and soaring number of record deals.
Israeli entrepreneurs, developers and investors are of extreme ambition, without
the fear of failing and willing to drive past any obstacles. These characteristics
result in global leading inventions and technologies which are ahead of other much
larger countries. The talent pool in Israel makes it a unique place to invest in. Israelis
tend to be straight to the point, and determined. Transactions and interpersonal
relations during the span of a transaction in Israel are less formal than in other
parts of the world, providing ease to the deals. Nonetheless, carrying out deals in
Israel resembles the basics of deals in the United States, whether it is in the style
of drafting transactional documents, in the standard terms and conditions which
are applied or the common way of doing business. The large number of American
investors in Israel is a result (and possibly a part of the cause as well) of this similar
approach to transacting. Above and foremost, Israelis can be known for their loyalty
to the letter of contract, which they stand by throughout.
Regulation Updates
In December 2013 a new law entitled the Law for the Promotion of Competition and
Reduction of Concentration, 5774-2013 (the "Law") was enacted. The purpose of
the Law is to reduce the concentration in the marketplace and therefore encourage
and support competition. The main aspects of the Law are with respect to limiting
pyramid structures within corporations and preventing against the holding by one
entity of both significant financial services businesses and industrial business.
As buyers within Israel for deals of this magnitude are limited, important international
investors, private equity funds and the like are expected contenders for the
divestments that will occur as a result of the Law.However, already the effects of this
Law have been felt. For example, Delek Group Ltd. was obliged to sell its controlling
stake in Phoenix Holding Ltd. (to China's Fosun International Ltd.), in order to comply
with the new Law's previously mentioned restrictions. This immediate reaction
and activity is due to corporations hurrying to divest immediately at a reasonable
value, as opposed to undergoing fire sales closer to the compliance date and losing
significant value.
Compliance with the Law must be completed by December 2019. This new
Lawwill strengtheneconomic activity as itmostly affects larger corporations,
creating a potential for many large deals in the coming years.