The article argues that many small Israeli companies function as “quasi-partnerships,” where trust is as important as the formal corporate structure. When that trust collapses, disputes often turn into destructive legal battles in which partners spend heavily on lawyers, damage the business, and sometimes keep fighting simply to avoid conceding to the other side. The piece says the best protection is not litigation, but advance planning through founders’ agreements, breakup mechanisms, and agreed valuation formulas.
It uses three major Israeli cases as warnings. In Panda Yishumay Mischar Ltd., founded in 2007 by Shmuel Gutman and Maor Lehav, a 50-50 deadlock left the company unable to approve even basic matters such as financial statements and the CEO’s salary. The Haifa economic court appointed an outside tie-breaking director, then ordered the company sold to a third party. It also imposed unusual legal costs of 3 million shekels on Lehav, 2.5 million to his partner and 500,000 to the company, and the Supreme Court upheld that ruling in May 2026.
In the Cybera case, the Israeli cybersecurity company was sold in 2014 to Palo Alto Networks for about $220 million, but the sale triggered a bitter founders’ dispute. Moses Ben Abu sued Naftali Davidi and Ori Alter, claiming he had been squeezed out and misled into signing share-waiver documents before the exit. The district court found “exploitation” and awarded him about 20 million shekels, but the case ended only in 2020 when a settlement in the Supreme Court appeal led to the judgment being canceled.
The third example is Gvaot Olam, where a power struggle among the founders, the general partner, and minority shareholders lasted eight years and paralyzed drilling activity. The Supreme Court ended the main case only in 2022, and in 2026 the founder’s stake was later bought through a forced bidding process at a price far below its original value. The article says these disputes could have been reduced or avoided with a detailed founders’ agreement, a built-in exit mechanism such as BMBY, and a pre-agreed accounting formula and neutral valuer.
