Corporate lawyer makes Israeli connection

The Daily Deal

September 15, 2000

Today's feature

by Vyvyan Tenorio (

Israeli technology companies appear to be turning the tables around on their U.S. acquisitors, and Steve Glusband is proud to be in the middle of it.

The corporate and securities lawyer at New York law firm Carter, Ledyard & Milburn has, for years, been steadily tapping a pipeline of Israeli companies that are moving to the U.S. to raise equity capital and get closer to their markets. Glusband assists these clients, typically backed by venture capital or wealthy individuals, in virtually all transactions, including initial public offerings.

Now, these connections have led to a rich vein of M&A business, as a number of Glusband's established clients seek to expand in the U.S. and other countries and embark on acquisitions of their own.

"A lot of the Israeli companies have begun to prosper. They've raised money through IPOs and are now in the market to buy companies in the U.S.," said the 52-year-old Glusband in a recent interview at his Wall Street office.

In recent months, the former Securities & Exchange Commission litigator has done a series of acquisitions for Israeli clients, involving both U.S. and Norwegian companies. "Two more deals are due to close in the next few days," said Glusband, who works with two recently hired Israeli lawyers and expects to hire one or two more shortly to cope with the growing deal flow.

Carter Ledyard is one of several technology-focused law firms specializing in serving Israel's high-tech sector, considered Silicon Valley's closest rival outside North America. Among its competitors: Brobeck Phleger & Harrison; Skadden, Arps, Slate, Meagher & Flom llp; Weil, Gotshal & Manges; Arnold & Porter Morrison & Foerster; and Fulbright & Jaworski.

Brobeck Phleger also recently hired two Israeli attorneys to handle the increased activity. "We're making a serious investment in what we call the Silicon Wadi [Arabic for 'desert valley'] practice," said Richard Gilden, a business & technology specialist at Brobeck.

In recent years, Israel has racked up the most foreign-based listings on the Nasdaq, after Canada. Last year, Israeli companies raised nearly $1.3 billion in IPOs and follow-on offerings on the Nasdaq, compared with just $300 million in 1998, according to Nasdaq market data. Since the beginning of the year, Israeli companies have raised $1.5 billion already, although the pace has slowed thanks to the current market conditions. Among the notable recent IPOs: VYYO Inc. of Cupertino, Calif.; Floware Wireless Systems of Or-Yehuda, Israel; and Camtek Ltd. of Migdal Haemek, Israel.

For Israel, the capital flow has historically been inbound. In 1996, America OnLine Inc. of Dulles, Va., bought a little-known Israeli startup, Mirabilis Ltd., a developer of the popular chat program ICQ, for $407 million. In May, Lucent Technologies of Murray Hill, N.J., purchased Petah Tikva-based optical networking startup Chromatis Networks Ltd. for $4.5 billion.

Lately, however, the flow has reversed, though the size of the deals may not be as eye-catching. On most days, Glusband, who has an affable, avuncular manner, finds himself glued to the phone or on the plane to Tel Aviv. His association with Israeli companies dates back to 1981, when he was an underwriter's counsel for one of the first biotech startups in Israel.

After graduating from City College of New York, Glusband attended the Fordham University School of Law, then joined the SEC as special trial counsel while studying corporate law at the New York University. He was then persuaded by one of his contacts to stop playing "cops and robbers" and join the now-defunct law firm Sage, Gray, Todd & Sims, where he began building up an Israeli clientele.

When he moved to Carter Ledyard in 1987, he was already well-versed in Israeli law. He currently handles both corporate and securities law for a variety of clients, including non-Israeli companies.

For Glusband, it's been a steady progression of work until this year, when the pace began to quicken. In the past four months, Carter Ledyard's list of Israeli clients has doubled, to about 40 companies. Half of these are new clients that have just set up offices in the U.S.

In between fielding a constant stream of calls, Glusband explained: "What's happening is that these companies realize that to grow rapidly, they must establish a U.S. presence quickly. So they're coming in earlier in the business development stage. They're also setting up a U.S. holding company as the parent company," owing to the greater sophistication and maturity of management, he added.

More importantly, the M&A flow is rising. In March, for instance, RT-Set Ltd., a New York-based provider of broadcast graphic solutions, bought the virtual studio business of Evans & Sutherland Computer Corp. of Salt Lake City for an undisclosed amount. Last month, RT-Set purchased Norwegian company Peak Broadcast Systems Ltd. for $60 million.

Similarly, Magic Software Enterprises Ltd., which Glusband took public in 1991, is moving on to bigger things, shifting its corporate headquarters from Or Yehuda, Israel to the U.S. shortly. In July the company announced it is in talks to acquire one or more U.S. software application companies. A month later, it signed a letter of intent to buy Philadelphia-based CoreTech Consulting Group, a provider of online business professional services, in a stock purchase agreement.

Brobeck's Gilden has likewise noted an uptick in his firm's M&A business from Israeli clients. "These businesses that have gone public have acquired the currency to use for acquisitions. Israeli companies have always had great technology, but they need to buy marketing and distribution channels, which they haven't been able to generate internally. So we're seeing quite a lot of strategic acquisitions," he said.

For all the bustle, Glusband tries to stay attuned to his clients' needs. "I try to provide them with a path of least resistance to the next stage of their growth. This means alerting them to any legal roadblocks that might come their way."

In turn, his clients have remained loyal to him. For Steven Fisch, president of Burlington, Mass.-based Attunity Ltd. (formerly ISG International Software Group), which Glusband took public in 1991, choosing Glusband as legal counsel was a "natural," he said, adding that he liked the fact that Glusband made himself accessible, even during vacations. "He's able to be a real partner and a real adviser whom we can rely on. These are traits that are sometimes rare among lawyers."

Vyvyan Tenorio is a senior writer at The Daily Deal. She can be reached at: (212) 313-9395 or

This article is reprinted with permission from the September 15, 2000 edition of The Daily Deal. © 2000 The Deal, L.L.C.

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