Israel IT wants to buy several small Ukrainian outsourcers

Mergewave Capital signed an agreement with the software developer Israel IT, which will allow to search for companies for a merger in the IT sector in Ukraine for the latter. Taras Bachynskyi, the co-founder of Mergewave Capital, told AIN.Capital about this.

• This is a strategic step for Israel IT, which plans to expand on the international market. The company wants to acquire IT companies with 50-200 specialists, while the technological stack is not essential. These can be both outstaffing and outsourcing companies.
• The deal may include Israel IT’s purchase of 51% of the company’s share (50% cash out, 50% – option in the 107 Ltd group of companies). At the same time, the main goal of such an association is further growth together. Israel IT declares its readiness for an active partnership regarding sales activities, using its connections, with scaling in the next 3-5 years through joint efforts.
• Israel IT has 300 professionals and specializes in enterprise software development. The company is part of Group 107 Ltd, which is listed on the Tel Aviv Stock Exchange and will allow the absorbed company to receive part of the shares of this public company.
• Mergewave Capital will act as an investment advisor to Israel IT.

“We are happy to announce that despite all the negative trends taking place in the world, and despite the war in Ukraine, the plans for acquisitions of IT companies have not stopped, and there are companies that, despite everything, are ready for active growth during difficult times. In general, the number of M&A deals will definitely decrease this year, but there are still active players on the market and new ones are still entering,”

Taras Bachynsky said.

• He also noted that, unlike most acquirers who try to fix the price of the future “repurchase” (in the form of a call option or simply fixing the price and the obligation to alienate the remaining 49%), Israel IT is ready to buy out the rest of the company in the next 3-5 years based on the market valuation in the event of an increase of its earnings.