I have been saying for years that US corporate growth in technology and many other sectors will increasingly come from overseas, namely China, India, Brazil and Middle East including Turkey. And yet most leaders heading up Fortune 500 US corporations tend to still think and operate ourely out of anglo-saxon mind-set and culture which will prove costly in my mind. Forexample, Microsoft, Cisco and Google expect to spend more time than ever before looking beyond US borders for acquisitions, company executives said this week. Even these beter managed companies may not be ready to make deals in China or India or Turkey. Some of them rely on investment bankers that typically make things more complicated and expensive to deal with.
Microsoft's managing director of corporate development Marc Brown, Cisco's corporate development VP Charles Carmel, and Google's corporate development VP David Lawee convened at a panel hosted this week by Silicon Valley's Churchill Club, a business and technology forum. All three executives said international acquisitions will be an increasingly large part of their companies' overall M&A activity in the months and years ahead.
With the acquisitions of videoconferencing company Tandberg in Norway and the set-top box business of Hong Kong-based DVN Holdings, Cisco is demonstrating an appetite for international growth it expects will continue, Carmel said. “Looking forward, the percentage of M&A outside the US certainly will be higher,” he added. In a brief interview following the panel, Carmel named China and India as particularly promising geographies for Cisco.
China remains a strong area of focus for Microsoft, Brown said in a one-on-one interview, adding the company is more partner-friendly than ever before. Going forward, Microsoft wants to have a strong presence in Brazil, Russia, India and China, he said. Microsoft “spends a lot of time thinking about search,” Brown said during the panel discussion when asked about the company’s current priorities. This interest resulted in a 10-year search partnership with Yahoo, which was finalized this week. “Much of what we wanted out of the larger transaction, we will get out of this partnership,” he said.
Google “inevitably” will do more globally, said Google head of M&A David Lawee, noting the company has 60 international engineering offices. "We have a footprint already around the world, and the capacity to add to those centers via acquisition in a relatively seamless way." The company likely will be especially aggressive in pursuing smaller buys, he said, noting that small acquisitions like Android, Keyhole and Urchin have "had a huge impact" on Google's success. Google will continue to make buys at a pace of about one per month.
When asked about the role of venture backers and financial advisors in deals, the executives all acknowledged VCs and bankers can help to make the acquisition process more efficient, since they have more deal-making experience than most entrepreneurs. However, all three agreed advisors should ideally “open the door and get out of the way.” Google is especially wary of dealing with investment bankers representing potential targets. “Every circumstance where there has been a banker, we probably have bid less than we would otherwise,” Lawee said.
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