Posts Tagged ‘mergers and aquis’

Here is an interesting article by Aaron Pressman at BusinessWeek.

“The conventional wisdom used to be that investors should run from technology companies that did too many mergers and acquisitions. But over the past decade, a group of top-tier tech wheelers and dealers has emerged that increased shareholder value with their acquisitiveness. Companies such as Oracle, IBM, and Adobe Systems have successfully used acquisitions to get into new lines of business, expand their customer bases, and grab hot new technologies. Still, some companies consistently overpay or buy yesterday’s big breakthrough. An informal survey of tech fund managers, analysts, and consultants yielded a list of companies investors will likely favor on more deal news—and a few they may shun.

Once mainly a hardware vendor of computers large and small, IBM (IBM) has used a sharp acquisition strategy to expand into software and information technology services. After a string of successful additions, including performance management software maker Cognos, and Rational, which makes tools to help programmers write code, IBM announced in July it would pay $1.2 billion for SPSS, a leading developer of software to analyze statistical data. “All the software acquisitions have helped shift the company toward higher margins and faster growing areas,” says Ken Allen, manager of the T. Rowe Price Science & Technology Fund. IBM was his 15th largest holding as of June 30.

Salesforce.com (CRM) has always been a poster child for the move from desktop applications to Web-based products. As more computing and data storage have migrated to online servers—the clouds in “cloud computing”—Salesforce has used a series of small acquisitions to keep pace. In 2006 it grabbed wireless software developer Sendia, for example, helping make all its offerings available over mobile phones. “They’re doing a good job of pushing each acquisition into their services,” says Jeff Kaplan, founder of tech consulting firm Thinkstrategies.

Cisco Systems (CSCO) is the king of bolt-on acquisitions. In a typical deal, Cisco purchases a much smaller company, such as voice-over-Internet gearmaker Sipura, which it bought for $68 million in 2005. Then it uses its manufacturing smarts and sales force to promote cutting-edge products that often fit into existing lines of business. Cisco also uses purchases to diversify and get into new businesses. This year it added Pure Digital Technologies, maker of the Flip digital video camera. “Their goal is to become a larger player in the consumer electronics and networking business,” says Ned Douthat, an analyst at Ockham Research in Roswell, Ga.”

Read the full article here.

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This current economic crisis has started to hit VC´s as well, Zero Stage Capital dissolves.

Zero Stage Capital, a life science and IT venture firm, dissolved last year after several poorly performing funds, according to limited partners. The firm’s few remaining portfolio companies have been transferred to a newly created firm, Vox Equity Partners, managed by the son of Zero Stage’s managing director.

Originally based in Cambridge, Mass., small business investment company Zero Stage raised a $150 million sixth fund in 1999 and a roughly $160 million seventh fund in 2001. In April 2005, the firm told VentureWire it had scrapped plans for a larger, $250 million eighth fund after several personnel changes, scaling back plans to raise a $150 million vehicle for buying struggling venture-backed businesses.

Yet by 2008, according to one limited partner who wished to remain anonymous for this story, the firm was run out of Managing Director Paul Kelley’s Sommerville, Mass., home as he worked to wind down its operations.”

Read the full VentureWire article by Jonathan Matsey here.

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