Acquisitions of private companies in Israel can have a different structure. You can buy shares of the company or its assets. Companies can also make a merger deal. Below, we will describe in more detail how M&A transactions are regulated in Israel and will analyze their pros and cons.
Depends on the number of shareholders
It is most preferable in this jurisdiction to acquire an Israeli company by buying shares, especially if the shares of the target company are not dispersed. Then the buyer is not burdened to collect the signatures of a large number of shareholders - by law, they must all put their signatures on the contract of sale of shares.
Buy only partially
An asset acquisition transaction in Israel is usually used if only part of the company is acquired or if the buyer wishes to acquire only certain assets or is willing to assume only certain obligations of the target company.
The acquisition of assets is a management decision based on a detailed study, development of its economic efficiency. When planning a deal, entrepreneurs primarily rely on the results of economic analysis, business modeling, planning, and budgeting. Not the last place in the decision to acquire assets is the choice of method of acquisition.
Difficulties in buying the company's assets in Israel
One of the most common problems that arise during the development of the structure of the transaction for the acquisition of assets and legal support for its implementation is the lack of a complete set of properly executed documents. Often this may be due to the lack of systematic paperwork, unresolved issues that have arisen during the registration of objects (cadastral, technical, etc.), or other subjective difficulties, errors, omissions.
Without going into a detailed analysis of all possible grounds on which the transaction can be challenged, it should be noted that the signing of the contract of sale and even the registration of acquired rights do not protect the buyer from the risks of claims by the former owner of real estate.
Completion of an asset acquisition transaction in Israel can take time depending on many factors, but on average it is necessary to be aware that it can take at least six months from the start of negotiations on the transaction to its completion.
It is not allowed for Israeli companies to merge with a foreign company.
Sometimes agreements governing the acquisition of Israeli companies are governed by foreign law. However, this is the exception rather than the rule.
In a merger deal in Israel, the buyer company and the target must jointly submit a "merger proposal" to the Israeli register of companies. The merger will be completed only after the Registrar of Companies has issued a "merger certificate".
You are welcome to contact us in a convenient way for more information if you are interested in this topic. Also, consulting an experienced solicitor on conducting M&A transactions in Israel will help to get acquainted with the basic requirements for this type of agreement and regulation. Our specialists can provide competent legal assistance for your M&A transaction in Israel.