"The government did the right thing by raising the corporate tax, in light of the social protest," said Shwed.
"Even after the raise, Israel is still an attractive investment destination. If the social protests results in Israel being a better place to live in and making its young citizens more comfortable, then Israel will become even more attractive for investors."
Shwed was referring to the government's decision to adopt the Trajtenberg Committee's recommendation to raise corporate tax by 25% after it had decided to lower it in the past.
He spoke at the Acquisition and Mergers Conference held by the KPMG Somekh Chaikin accountancy firm and Naschitz Brandes law firm. Shwed is a client of Naschitz Brandes and considered one of the firm's most important accounts.
Check Point's profit forecast for 2011 was presented during the conference, according to which the information security giant will post a bottom line of about $1.25 billion against $1.1 billion last year.
'We approach target companies'
"We don’t acquire for the sake of acquiring. We do so only after having determined that the target company can be incorporated into a broader strategy," explained Shwed while reviewing Check Point's acquisition strategy throughout the years.
The company's last acquisition was Dynasec, a privately held Israeli provider of Governance, Risk Management and Compliance (GRC) solutions for which Check Point paid, according to estimates, only a handful of millions of dollars.
"Eighty percent of the acquisitions we performed were the result of a proactive strategy in which we approached the target company rather than the other way around.
"Sometimes we meet companies without any stated purpose – it’s our way of getting to know each other, share information and pick each other's brains. It develops our imagination".
To date, Check Point acquired seven global high-tech companies, including NFR, Pointsec, Liquid Machines and Nokia's security division.
Furthermore, Check Point had also acquired the activity of Israeli SofaWare in 2002, first by acquiring majority ownership of the company and later by purchasing the remainder of the company's stock.
"The acquisition of a company is not simple at all; when one company acquires another, the acquiring company goes through sudden growth," explained Shwed.
"From my experience, acquisitions immediately erode 30% of the target company's activity which means that if, prior to the acquisition, the target company had a sluggish growth rate, an acquisition might stem its growth altogether which is why we never consider acquiring a company just because we have the cash for it – unless a company is technologically important for us or has an insane growth rate which justifies the price tag.
"It's hard to find all of these factors in a single company."
"Acquisitions might edge off the independent spirit and entrepreneurship of the target company's top management," explained Shwed."When the company is theirs then it is a matter of life and death. But once they're acquired, it’s a matter of living whichever way."
"From my experience, once a company is acquired, top executive management jumps ship in a flash. We try to make changes in the company's labor agreements at the time of the acquisition rather than wait for several months – it works well and the employees are not as apt to resist the change."
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