The rule of thumb for mergers and acquisitions is that the majority will fail. So why, despite concerns about big companies buying up the tools of startups, does EDA’s track record look so good?
There are a number of answers that are unique to the EDA industry:
- There is no manufacturing that needs to be absorbed by the acquirer, which greatly simplifies any deal.
- Sales and marketing at startups are almost perpetually understaffed, making that part of the transition relatively easy.
- Companies being acquired in this field typically are undervalued, which makes the deal easier to finance without resorting to massive resource cuts after the deal is closed.
- Engineers from multiple companies work well with other engineers on problems they both understand.
- Companies with the biggest M&A budgets are running so fast to keep pace with advanced designs of large customers that they can’t afford to build lumbering bureaucracies. That keeps the acquirer remarkably nimble, although never as nimble as the company being bought.
There are technical reasons, as well.
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