Israel – a resilient legal market

In recent years, key market trends primarily concerned Prime Minister Netanyahu’s proposed constitutional reforms, the COVID-19 pandemic and its impact, and the opportunities arising from the Abraham Accords with Bahrain and the UAE. Discussions of the Israeli market in 2025 and the beginning of 2026 were dominated by the conflict in Gaza and Iran, as well as strained relations with other neighbouring countries, including Lebanon.
 
Although a ceasefire in Gaza came into effect on 10 October 2025, the situation remains fragile, with reports of violations and stalled talks, while the crisis in the Strait of Hormuz has emerged as an additional source of regional tension. 

Despite these tensions, the Israeli market has demonstrated notable resilience, as also demonstrated by the shekel's rise to around four-year ‌highs against the dollar. While the geopolitical situation has heightened regional uncertainty and initially weighed on cross‑border activity and foreign investment, Israel has remained a robust legal market anchored in key sectors such as technology, infrastructure, energy and real estate. 

In the technology sector, M&A activity surged in 2025, with landmark transactions including Google’s USD32 billion acquisition of Wiz and Palo Alto Networks’ USD25 billion purchase of CyberArk. Domestic law firms, meanwhile, reported relative stability in overall transaction volumes. Israel has also sustained its reputation as the ‘start‑up nation’, with consistent levels of activity across venture capital and investment funds, particularly within the technology space. Fintech and AI also continue to grow, supported by strong technical capabilities in the Israeli market. Defense is another key sector, considering global geopolitical dynamics, with increasing interest from international, especially European, countries and companies in Israeli defence technology. 

Increased activity has also been observed in administrative law, financial regulation and, to a lesser extent, life sciences. Notably, Administrative & Public Law and Financial Services: Regulatory are new practice areas which are open for submissions to the Global Guide 2027 for the first time.

While foreign investment declined in the wake of the war in Gaza, signs of improvement in foreign‑investor sentiment have emerged since the October 2025 ceasefire, both domestically and internationally. Law firms reported continued growth in lending activity by alternative investors, including insurance companies and other financial, investment and private‑credit institutions, operating either independently or alongside banks in extending credit to corporate clients. Firms also note increased interest from banks in collaborating with alternative lenders through pooled and syndicated structures, particularly in the areas of auto finance, consumer credit and real estate lending. This trend has been reinforced by strong interest from international private-credit institutions —especially US‑based funds—seeking to expand their lending activity in the Israeli corporate sector. More recently, major banks have also begun participating in financing Israeli clients operating abroad, most notably in the USA. This is expected to become a growing area of activity for the largest banks and their most significant clients.

(Source – law firm’s Banking & Finance submission)

Financing activity in Israel spans a broad range of sectors. Real estate lending, alongside investments in technology, cybersecurity and defence companies, remains particularly active. Urban renewal and residential development represent key growth areas as population expansion places increased pressure on infrastructure. Finally, the rapid development of AI technologies continues to stimulate investment and is expected to remain a prominent feature, potentially expanding its role as an alternative to traditional financial and investment advisory services.

(Source – law firm’s Banking & Finance submission)

Equity and debt capital markets staged a strong recovery in 2025–26 despite the ongoing conflicts. In the 12 months to May 2026, the Tel Aviv Stock Exchange’s TA‑35 index has risen by 70% to 4,514, while the broader TA‑90 gained 54% to reach 4,319. Over the same period, the Nasdaq rose by 42%, a development that is likely to encourage both primary and secondary market issuances by Israeli technology companies. In January 2026, an issue of USD6 billion of Israeli government bonds was fully subscribed, marking the first sovereign bond issuance since the October 2025 ceasefire in Gaza. 

Between 2022 and 2026, many Chambers-ranked capital markets practitioners devoted greater attention to M&A activity, as markets were largely subdued and equity capital markets activity remained limited. That landscape has now shifted, with conditions for equity issuances by Israeli corporates more favourable than at any point in recent years. The last major Israeli listing on Nasdaq—eToro— proved challenging, but market commentary largely attributed its underperformance to broader crypto‑sector weakness rather than country‑specific factors. Firms with strong international practices continue to play a central role in advising Israeli corporates on capital raisings overseas, predominantly in the USA, with NYSE and Nasdaq listings now almost exclusively the preferred venues.

Private equity interest in Israel also remains strong, particularly in the technology sector. However, rising valuations on Nasdaq and the local market may make public offerings increasingly competitive, while also providing private equity investors with more attractive exit opportunities than have been available in recent years. 

Finally, demand for debt issuances by Israeli companies remains robust in the market. The real estate sector is particularly active, with several firms highly specialised in real estate‑related debt work, while larger practices remain equally engaged in advising on high‑value, high‑yield issuances in the international markets.

(Source: Capital Markets lawyer)

Over the coming months, the Israeli market is expected to continue its recovery. The TA‑35 Index’s rise over the past year should stimulate increased interest in both primary and secondary equity issuances. Mainstream bank lending and bond issuance activity are also likely to benefit from a downward trend in interest rates, following the Bank of Israel’s rate cut to 4.0% in January 2026. Banks are entering this period with stronger balance sheets, which should support future lending. Market recovery is expected to create a more receptive environment for domestic equity offerings, particularly in the technology and defence sectors, which currently represent the most attractive growth areas in the Israeli market.

On the other hand, the ongoing conflict in the Middle East, combined with global fuel‑related inflationary pressures, still represents a significant source of uncertainty that will require close monitoring in the months ahead. A positive and swift resolution of tensions could give a further boost to the Israeli market, leading to further expansion in lending and capital markets activities.