This document discusses considerations for mergers and acquisitions (M&A) based on Dr. Giora Yaron's experience. It outlines key factors in M&A deals such as maximizing shareholder value, competitive landscape, market maturity, and founders' desires. Both acquirer and seller views are examined through examples like Cisco acquiring P-cube for its technology and HP acquiring Mercury to create a 1+1>2 strategic move. Overall, the document advises considering strategic fit, product portfolio fit, company DNA, and case studies when determining whether to pursue an M&A deal or continue independently.

1. M&A
“TO BE OR NOT TO BE?”
Dr. Giora Yaron

2. M&A Experience base
Comsys I; Sold to Conexant 1996
Pentacom; Sold to Cisco, 1999
P-cube; Sold to Cisco 2004
Mercury; Sold to HP 2006
Qumranet; Sold to RedHat 2009
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3. M&A Key consideration;
Maximizing Share Holders Value
Breadth of product portfolio
Competitive landscape
Market segment
Maturing? Exploding? [Scitex/Creo/Kodak]
Disruptive technology emerges [Kodak
films, Galileo/Marvell]
Founders desire
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4. THE EMOTIONAL QUESTION
Do I want to sell
or
take it all the way?
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5. THE TWO SIDES OF M&A
Acquirer view
Defensive; control product transition
(Rockwell/Comsys)
Catch-up strategy; “On the fly fix” for a strategic
miss (Cisco/P-cube, Qumranet/RedHat)
Strategic response to deliver 1+1>2 (HP/Mercury)
Seller view
Defensive; competitive new technologies, market
changes [Rockwell/Comsys, Cisco/P-cube,
Qumranet/RedHat]
Quick liquidity
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6. ACQUIRER VIEW; DEFENSE PLAY
[ROCKWELL/COMSYS]
CPU processing power increases
HW enhanced instructions can be done in
SW
No need for HW modem
Rockwell market leader (70% market share)
in HW modems.
Comsys technology threatens hundreds of
millions of Rockwell revenue
Rockwell acquires Comsys to control market transition
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7. CATCH-UP STRATEGY; CISCO/P-CUBE
P-cube develops Deep Packet
Inspection [DPI] for next generation
networking systems
P2P takes the market by a storm
Cisco has a hole in its product offering
Cisco acquires P-cube to meet market need “on the fly”
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8. CATCH-UP STRATEGY; REDHAT/QUMRANET
Qumranet develops Hypervisor for Linux
RedHat market leader for Linux has no
virtualization strategy
The compute world is going vitrual
RedHat acquires Qumranet for its KVM Hypervisor
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9. STRATEGIC MOVE;1+1>2
(HP/MERCURY)
HP Openview has wide acceptance in
the data center mgt market, but
competing hard against IBM Tivoli
Mercury “owns” BTO market
(performance analysis infrastructure
and application)
HP acquires Mercury; 1+1>2
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10. BIG COMPANY; UNIQUE CONSIDERATIONS
Breaking the $1B revenue barrier
Customers pushing for “end to end”
solution
Must
increase number of deals at the $10m-
$25m level
Must go global rather than national
Must develop global support infrastructure
Must develop global IT infrastructure
Conclusion; Expend via acquisitions or be acquired
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11. “VALIDATION POINT”
Mercury sold to HP
Stock shoots overnight from $34 to $52!!
Largest acquisition in the history of the
country!!!
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12. Considerations to insure successful
M&A
Considerations
Strategic fit
Product portfolio fit
Company DNA
Case studies
Conexant/Comsys
Cisco/P-cube
HP/Mercury
RedHat/Qumranet
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13. VALUATION DEFLECTION POINTS
Technology feasibility; up to $100m
(Pentacom, Qumranet)
Market traction; up to $250m (P-cube)
Customer base; up to billions (Mercury)
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14. ALL THE WAY VS. M&A
THE ISRAELI PERSPECTIVE
Historically had no mgt infrastructure to
go all the way; No more!!
Historically US lead innovation in all
technology segments; No more!!
Historically US market were first to
adopt new technology; No more!!
Today more than ever before Israeli
Based companies can go “all the way”
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16. THANK YOU!
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