21 will also have certain requirements for accepting the money. Accordingly, to the extent companies are taking government backed investments we recommend they do so thoughtfully and with a full understanding of the rules around, and the impact of, the investment.” Nevertheless, defense-tech companies are targets for acquisition and investment For defense-tech entrepreneurs, the opportunities are obvious. Israeli firms are proving that small, agile countries can sell systems at the highest end of the market. The USD14.7 billion export figure shows demand is not only sustained, but rising. Shibolet’s Einat points out: “What we are currently seeing in the market is a trend where private equity funds are beginning to view defense companies as candidates for acquisition or investment with the goal of taking such companies public in the near future.” She adds: “Additionally, we are starting to see foreign companies coming to Israel to acquire startups and technology companies operating in defense sectors. A significant portion of the acquisitions we observe, whether by local private equity funds or global corporations, are strategic acquisitions, where the acquiring entity—whether a private equity fund or a company operating in the field—seeks to integrate the startup’s operations with its existing activities to create synergy and strengthen an existing business area.” Anna at Pearl Cohen explains: “There is growth funding / venture-capital rounds in Israeli defense (or dual-use) tech, the dual-use technology trend allowing Israeli companies to leverage international partnerships to scale innovation, manufacturing and commercial markets. We are also seeing strategic cross-border mergers and acquisitions of Israeli defense-tech companies. We would see direct export transactions and foreign supply-chain or production partnerships: Israel as an exporter or co-producer. We also see patent licenses limited to specific fields and territories and licenses limited to specific fields in dual use technologies. It is possible we will also see substantial state-backed or state-guaranteed fund structures in the near future.” Lee Noyek, partner at A&O Shearman, points out: The biggest defense deals in Europe last year - Rheinmetall’s USD950 million deal for Loc Performance Products and Loar Holdings’ acquisition of France-based LMB involved conventional weaponry and advanced manufacturing. But a closer analysis
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