The Ledger
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Refusing to engage corporate development closes doors to major enterprise growth
“If you ignore that because you don't see A Cisco as a potential partner or investor or potentially a future acquirer. What you're doing is you're really prematurely closing the door on what may be the biggest potential accelerator for your business.”
Acquisition multiples matter less if the buyer can create post-merger value
“If you're in a position that you can see an opportunity to add value, the fair multiple is actually less relevant.”
Cisco acquired non-portfolio startup Viptela over its own portfolio company VeloCloud
“When we made the decision on who we were going to make part of Cisco, we acquired a company that was not a Cisco investment. We acquired a company called the Viptela. And since that time, Viptela has come onto Cisco. It has become our lead SD-WAN offering. And…”
VC incentives diverge from founders on $100 million versus billion-dollar exits
“Entrepreneurs are often surrounded by venture investors, perhaps very successful venture investors, that may have motivations that somewhat differ from that of the entrepreneur, but the entrepreneur may be going through it for the first time. The VC may have d…”
Cisco's highest multiple acquisitions like AppDynamics and Meraki were its most successful
“In fact, if I look at some of our most Strategic or financially successful acquisitions, moves like AppDynamics, moves like Meraki, they, in fact, were some of our highest multiple deals.”
Cisco acquired AppDynamics one day before its scheduled IPO
“In AppDynamics' case, we acquired the company a day before it went public, and I think what that showcased Is when Cisco decides to do something, we can move faster than anybody else.”
Cisco invested in VeloCloud while simultaneously developing a competing internal product
“Cisco saw that we also should be willing to invest in one of those startups, despite the fact that we were also trying to build something ourselves, and so in addition to our internal program, we went out and invested in one of those startups. That company was…”
Growth tech companies are trading at 20 to 30 times sales
“And look, if you look at the multiples that are going on today, these growth companies are trading at 20, 30 times sales. And those used to be P multiples in our business.”
Corp dev success means enabling outcomes targets could not achieve alone
“I think the best measure for success or corp dev is, have we been able to get the company to accomplish something that left to its own wouldn't have been possible?”
Cisco operates strategy-first corporate development, unlike transaction-focused peers
“A lot of corp dev groups, I think they're all about the transaction. They get a call. I want to buy this company. And that's what they do for Cisco. It really starts with the strategy.”
Cisco's Meraki, AppDynamics, and OpenDNS deals originated through corporate development
“So when I look at just the partnerships or investments or acquisitions that I've been involved with, Meraki, OpenDNS, AppDynamics, Investments like Cohesity, Turbonomic, all of those relationships, they actually began with corporate development. And when those…”
Founders fundamentally need to own their own independent distribution channels
“A company needs to own its own distribution. And I consider that sort of fundamental to what you need to build as a founder or CEO.”
Private equity firms are paying unprecedented multiples for tech acquisitions
“We are seeing PE firms get more and more involved in technology companies that had profiles that they normally wouldn't go after, and because of the sheer amount of capital that's out there, being willing to pay multiples and valuations that also are unprecede…”
M&A deals fail when acquirers apply rigid, one-size-fits-all integration models
“I do think the reason that a number of acquisitions fail with other acquirers is taking a one size fits all type of approach.”
Most hardware companies fail when transitioning to cloud and software models
“If you look at companies that have been able to make that transition, most people have failed.”
Cisco requires board approval for billion-dollar acquisition deals
“For a certain level of acquisition, that could be approved by our CEO and CFO, and then if that acquisition begins to get into the billions, that's something that we'll want to involve our board directly on.”
Cisco made OpenDNS founder David Ulevitch GM of its overall security business
“OpenDNS was a relatively small company. It was less than a hundred million dollars when it came inside Cisco, but we wanted to embrace that philosophy that David had for security, and so shortly thereafter, David Ulovich actually became the GM of Cisco's overa…”