Mergers and AcquisitionsMergers and Acquisitions

the road to Liquidity in the post internet ageMichael McNamara

Senior Vice President, TechnologyVerisity Design

BackgroundBackground

I was a computer architect in the 1980s… Co-founder of an EDA company in 1992 Merged it into Viewlogic in 1994 (now Synopsys) Started another EDA company in 1996 Merged it into Verisity in 1999 Verisity made its IPO on 3/21/01 as VRST @ $7

Stock has done well since then

Sometimes you hit…Sometimes you hit…

A Home RunCisco, Apple, Yahoo

Some times just a double Or you strike out If you get on base: make sure you score!

How do I do this?

Review: Criteria for IPOReview: Criteria for IPO

Growth Market Revenue Profits Experienced Management Merger capable

How to Grow a CompanyHow to Grow a Company Growth by Acquisition (A)

Most explosive (!) Growth by Focus and Execution (F&E)

Always needed Growth by Joint Sales and Marketing (JSM)

Collaborative Growth by Development of Additional Products (DAP)

Predatory, Expensive

AcquisitionAcquisition How to acquire

Many professionals will be happy to help you

Whom to acquireMinimize pain, maximize gains

How to be acquiredTiming and fit are importantIt’s good to be on the winning team

Company StagesCompany Stages 1: Idea

Two guys, a garage 2: Proof of Concept

Above + a demo 3: First Customer Ship

Someone will buy it! 4: Proliferation

Get channel

5: GrowthSell. Build. IPO?

6: Steady StateOwn a market

7: ConglomerateAcquirer

8: End of Life8 track tape

Good CombinationsGood Combinations

Growth + First Customer ShipIt works! Little overlap; still some risk

Growth + ProliferationMarket exists; some channel conflict

Conglomerate + Steady StateMore revenue; Economies of scale

Not so GoodNot so Good

Growth + IdeaAll risk, when revenues are needed

Growth + GrowthInternal fights

Anything + End of LifeBuying a name

Where to find partnersWhere to find partners

The singles bar…Trade shows / magazinesPartnership Programs

Adjacent marketsExtend the reach of both companies

Don’t merge with a competitorNow the fights will be internal!

How to mergeHow to merge Signing the docs is the first step

It will take longer than you imagine Focus on cementing the union

Fly everyone to the other officeTransfer people between the old companies

Be open to new directionsA.E. becomes Sales; Engineer becomes Tech. Marketing

Study those who have done it wellCisco

Thank you for your timeThank you for your time

Questions? mac@verisity.com