Mergers and Acquisitions the road to Liquidity in

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

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

Sometimes you hit… ÜA Home Run Cisco, Apple, Yahoo Ü Some times just a double Ü Or you strike out Ü If you get on base: make sure you score! How do I do this?

Review: Criteria for IPO Ü Growth Market Ü Revenue Ü Profits Ü Experienced Management Ü Merger capable

How to Grow a Company Ü Growth by Acquisition (A) Most explosive (!) Ü Growth by Focus and Execution (F&E) Always needed Ü Growth by Joint Sales and Marketing (JSM) Collaborative Ü Growth by Development of Additional Products (DAP) Predatory, Expensive

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

Company Stages Ü 1: Idea Ü 5: Two guys, a garage Ü 2: Proof of Concept Sell. Build. IPO? Ü 6: Above + a demo Ü 3: Steady State Own a market First Customer Ship Ü 7: Conglomerate Someone will buy it! Ü 4: Growth Proliferation Get channel Acquirer Ü 8: End of Life 8 track tape

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

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

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

How to merge Ü Signing the docs is the first step It will take longer than you imagine Ü Focus on cementing the union Fly everyone to the other office Transfer people between the old companies Ü Be open to new directions A. E. becomes Sales; Engineer becomes Tech. Marketing Ü Study those Cisco who have done it well

Thank you for your time Ü Questions? mac@verisity. com