Monday August 14, 9:14 am Eastern Time

Magic Software Signs Letter of Intent to Acquire Major North American Provider of E-Business Professional Services

OR YEHUDA, Israel--(BUSINESS WIRE) -Aug. 14, 2000 - Magic Software Enterprises (Nasdaq:MGIC - news) Monday announced that it has signed a Letter of Intent to acquire CoreTech Consulting Group Inc. (CoreTech), a leading provider of e-business professional services in North America.

The acquisition, which is subject to the completion of customary due diligence and the execution of a definitive stock purchase agreement, will add depth to Magic's consulting and professional services capabilities in North America, as well as give the company access to CoreTech's client base, which includes several leading FORTUNE 500 and middle-market companies.

CoreTech

Magic's decision to acquire Philadelphia-based CoreTech is in line with the company's strategy to expand its solutions business in the North American market. Following introduction of award-winning applications in both the e-business and CRM arenas, Magic has cultivated a growing pipeline of business opportunities.

However, the company has lacked the professional human resources required to complement those solutions. The proposed acquisition of CoreTech, which was founded in 1992 and currently has more than 200 experienced employees, will aid significantly in the resolution of this situation.

"CoreTech's ability to successfully penetrate and interact with well-established FORTUNE 500 and middle-market companies on large projects, as well as its sizable professional employee base, will provide Magic the depth we need to gain a more immediate and more profitable foothold in North America," said Jack Dunietz, chief executive officer of Magic.

CoreTech, which will benefit from Magic's technological sophistication and international reputation, is expected to add immediately to the level of revenues from Magic's North American operations.

"CoreTech looks forward to the much larger portfolio of products, clients and partner relationships that the association with Magic will bring," added David Moore, chief executive officer of CoreTech.

About CoreTech

CoreTech Consulting Group Inc., an e-business professional services firm, assists companies with e-business solutions from strategy through implementation, integrating Internet technologies with traditional business systems and creative design.

CoreTech's clients include FORTUNE 500 and middle-market companies such as SmithKline Beecham, Towers Perrin, Cellular One, Paine Webber, SunTrust, Credit Suisse, Pfizer and many more. CoreTech, which has been named to the Inc. 500 and Deloitte & Touche's "Fast 500," is based in suburban Philadelphia, and has additional offices located on the East Coast.

More information about CoreTech may be obtained by calling 800/220-3337 or visiting www.CoreTech.com.

About Magic Software

Magic Software Enterprises, a member of the Formula Group (Nasdaq: FORTY - news), develops, markets and supports software development and deployment technology that enables enterprises to accelerate the process of building and deploying applications that can be rapidly customized and integrated with existing systems.

Magic technology, applications and professional services are available through a global network of subsidiaries, distributors and Magic solutions partners in approximately 50 countries. The company's North American subsidiary is located at 1642 Kaiser Ave., Irvine, Calif., 92614, telephone 949/250-1718, fax 949/250-7404, http://www.magic-sw.com.

The Formula Group is an international information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and producing computer-based solutions.

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both here and abroad, release and sales of new products by strategic resellers and customers and other risk factors detailed in the company's most recent annual report and other filings with the Securities and Exchange Commission.

Contact:
Magic Software Enterprises, Irvine
Katharine Hanley (investor/public relations)
949/250-1718 ext. 220
khanley@magic-sw.com or
Magic Software Enterprises Ltd., Or Yehuda
Israel Teiblum, 011-972-3-538-9292 ext. 311
iteiblum@magic-sw.com