When “good” mergers aren’t so good
By Jim Lipman, Technical Editor -- EDN, April 1, 1999
Merger mania—rampant throughout American industry—has not spared the EDA-tool-vendor community. Over the past two years, we've all read about many successful and some not-so-successful company acquisitions and mergers. Not all acquisitions are in your best interests, and some aborted mergers appear to be for the best. "Win-win" mergers, in which the stockholders of both companies benefit—at least on first inspection—are relatively frequent. As a designer working with one, or sometimes both, merging companies, it would be nice if the merger resulted in a third win as well: a win for you. This situation is not always the case. A look at what I consider two "designer-friendly" mergers, along with a couple of perceived "designer-unfriendly" deals—one successful and one failed—helps explain my opinion. OrCAD's (www.orcad.com) 1997 acquisition of MicroSim is, to me, a good merger for board designers. The companies' products are complementary: Before the merger, OrCAD had low-to-medium-range pc-board-design tools, and designers acknowledged MicroSim's strong analog pc-board-design products. After the merger, good technology did not disappear, and designers now have a more comprehensive tool suite from OrCAD. Similarly, Cadence's (www.cadence.com) 1998 acquisition of logic-synthesis vendor Ambit (www.ambit.com) also benefits the design community. Broad-based tool-vendor Cadence will integrate Ambit's BuildGates synthesis technology into Cadence's chip-design flow. The integration lets Cadence offer designers a tightly integrated tool set, spanning high-level design definition and partitioning through chip placement and routing. Cadence's BuildGates support also enhances the tool's competition with Synopsys' (www.synopsys.com) Design Compiler—competition that forces both companies to continue improving their products. Xilinx's (www.xilinx.com) purchase of Neocad in 1996 is an example of a merger that hurt designers because it effectively limited competition. Taking Neocad's programmable-logic place-and-route tools off the open market (beyond contractual agreements that were in place at the time of the merger) hurt two companies, Lucent (www.lucent.com) and Motorola (www.mot.com), whose FPGA programs depended on Neocad's back-end products. Motorola is now out of the FPGA business. And although Lucent's Orca FPGAs are here, the Neocad purchase certainly delayed Orca progress until Lucent could develop in-house FPGA-place-and-route tools. Finally, it is worth mentioning a recent acquisition attempt that failed: Mentor's (www.mentorg.com) hostile takeover of Quickturn (www.quickturn.com), a design-verification hardware and software vendor. The failure worked out for the best for both companies. Although the acquisition would have helped Mentor by killing competition, it also would have stretched Mentor's finances, most likely adversely affecting the company's development and support of other EDA tools. Quickturn's subsequent acquisition by Cadence forces Mentor and Cadence to strive for high-quality verification products to compete against each other. As designers, you should keep track of potential mergers that affect companies whose products you use. The possibility always exists that certain of your key products may not survive the merger, forcing you to look elsewhere for comparable tools or to learn how to do without them. Remember, "win-win-win" situations—with you as the third winner—are not automatic. |
|||
|
|
|||
Contact me at ednjim@earthlink.net. |
|||
Talkback
