Mergers and Acquisitions the road to Liquidity in the post internet age Michael McNamara Senior Vice President, Technology Verisity Design

Background  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 $7 Stock has done well since then

Sometimes you hit…  A Home Run Cisco, 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 IPO  Growth Market  Revenue  Profits  Experienced Management  Merger capable

How 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

Acquisition  How to acquire Many professionals will be happy to help you  Whom to acquire Minimize pain, maximize gains  How to be acquired Timing and fit are important It’s good to be on the winning team

Company 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: Growth Sell. Build. IPO?  6: Steady State Own a market  7: Conglomerate Acquirer  8: End of Life 8 track tape

Good Combinations  Growth + First Customer Ship It works! Little overlap; still some risk  Growth + Proliferation Market exists; some channel conflict  Conglomerate + Steady State More revenue; Economies of scale

Not so Good  Growth + Idea All risk, when revenues are needed  Growth + Growth Internal fights  Anything + End of Life Buying a name

Where to find partners  The singles bar… Trade shows / magazines Partnership Programs  Adjacent markets Extend the reach of both companies  Don’t merge with a competitor Now the fights will be internal!

How 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 office Transfer people between the old companies  Be open to new directions A.E. becomes Sales; Engineer becomes Tech. Marketing  Study those who have done it well Cisco

Thank you for your time  Questions?