Playing with the big boys

Author:
Alix Paultre, Editorial Director, PSD

Date
09/05/2016

 PDF

Mergers and acquisitions have always been a part of our, and all, industry. Companies buy and sell one another for many reasons, and in the consumer and commercial industries many of these reasons are not necessarily conducive to the health of the companies and application spaces involved. Fear of the competition, greed for money, and personal agendas are among those negative influences. One only need to look at the old Lucent/Tyco buy to see what disruption a bad merger can make.

The silver lining in a cloud of that nature is that actions trigger reactions, and the Lucent buy caused one of the biggest brain drains in our industry in recent history, with engineers leaving the company in droves. The positive aspect of this was that many of them created the companies that were on the cutting edge of digital power electronics development and launched and legitimized that application space. Like Shiva destroying things to make way for new creation, sometimes a bad move for a company can turn out to be a good one for the industry.

Other reasons for mergers and acquisitions are not a fear of the competition, but a true desire to stay competitive. Other positive reasons include a desire to integrate core IP from the target company and/or key personnel. Such mergers can be identified by the intelligent integration and proper management of the staff and core IP sets of the companies involved. These are beneficial for both the companies involved and the industry as a whole.

Recent examples of “good” mergers that come to mind are the Texas Instruments/National Semiconductor deal and Infineon’s recent purchase of International Rectifier. It is too early to say if the Linear Technology/Analog Devices marriage will work, but initial signs and a knowledge of the players leads me to believe it will be a healthy one.

Even a healthy merger has its bumps and issues, but one that stems from more positive forces will have a significantly greater chance of success and an opportunity to add value to the industry than one that comes from fear or greed. It is almost impossible to get people to act on a basis of what is good for the industry vs. what is good for them, but intelligent business management can help the two coincide at a significantly greater rate.

One of the drawback to this wave of business activity is that it foments even more merger and acquisition endeavor in the industry. If you want to play with the big boys, it helps to be a big boy yourself. The danger there is that if you pump yourself up with artificial means or dangerous and risky maneuvers, you run great risks. 

PSD

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