Civil Appeal 6867/22 Eli Kahane Holdings Ltd. v. Tax Assessor Tel Aviv 3 - part 22

In this context, I will add that I cannot accept the position of the appellants that since the consideration in each of the agreements is the result of negotiations, there is no room to reflect on the manner in which it is split.  I will clarify.  The situation we are dealing with is a transaction involving three parties - The acquiring company, Eisenberg & Kahane - Sheva Kahane and the Eisenberg Company "Satisfy" together the requested contractual consideration (including effective non-competition on their part), which is a contractual consideration that cannot be separated into parts.  In this situation, from the point of view of the acquiring company, negotiations are being conducted on the total amount that it is willing to pay, to Eisenberg and Kahane together, for the counter-consideration requested by it, which they can only provide to it together.  Taking into account that we are not dealing with a modular transaction, which can be divided into parts, from the perspective of the acquiring company, there is no separate negotiation on the consideration to Eisenberg for the purchase of the activity and its undertaking not to compete with it, and separate negotiations with Kahane for his undertaking not to compete with it, but rather negotiations are being conducted on the total amount, the manner of which is divided between Kahane and Eisenberg will not usually be of interest to the acquiring company (but only in the context of tax savings).  In this situation, in contrast to a modular transaction that can be separated into parts, there is no reason to accept the argument that since the split consideration is the result of negotiations between the parties, the authenticity of the manner of the split should not be considered: The Overall Value is indeed the result of negotiations between the parties, who are, in this regard, conflicting interests.  On the other hand, Fragmentation of this consideration is not necessarily the result of negotiations between parties with conflicting interests.