8 THE US-ISRAEL | Legal Review 2025/26 increased attention from foreign corporates and governments, bringing additional considerations around export controls, foreign ownership sensitivities, and government approvals. Artificial intelligence continued to generate deal flow, but with a discernible shift toward applied solutions embedded in regulated industries such as financial services, healthcare, and industrial systems. These transactions required thoughtful navigation of data governance, emerging AI compliance frameworks, and cross-border operational constraints. For many companies, legal readiness became not only a cost of doing business but a differentiator in fundraising and exits. Beyond cyber and applied AI, Israel’s deep-tech ecosystem has reached a scale that few hubs outside the United States can rival. In 2025 there were roughly 1,500 active deep-tech companies across sectors such as medical devices, semiconductors, agrifood, biotech, and advanced AI. This depth of foundational R&D-intensive innovation not only diversifies the technology landscape but also provides fertile ground for complex, high-value transactions and collaborations that extend well beyond traditional software start-ups. Looking Ahead to 2026 Expectations for 2026 are measured but constructive. Assuming relative macroeconomic stability, several trends are likely to shape the year: » A gradual increase in M&A, particularly mid-market transactions driven by strategic buyers. » Continued emphasis on governance, compliance, and regulatory preparedness as prerequisites for fundraising and exits, and more creative structures to reconcile pricing expectations. » Public markets may reopen selectively, but likely only for mature, revenue-driven companies with strong operating discipline. Conclusion 2025 was not a return to prior exuberance, but it signaled a pivot toward a more resilient and mature market. The year underscored that high-quality Israeli companies continue to command global relevance and strategic value and that legal, operational, and regulatory sophistication increasingly determines outcomes. As 2026 unfolds, the ecosystem appears better positioned for sustainable growth rather than cyclical excess. About the Authors Nataly Margalit and Uri Nesher are partners in the High-Tech and M&A practices at Arnon, TadmorLevy, advising Israeli and international companies and investors on complex and high-profile M&A transactions, venture capital and private equity investments. Uri Nesher Partner, High-Tech and M&A Nataly Margalit Partner, High-Tech and M&A “Defense-tech and dual-use technologies attracted increased attention from foreign corporates and governments, bringing additional considerations around export controls, foreign ownership sensitivities, and government approvals.”
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