Review
Once the gold-plated standard for how to succeed on the Internet, Cisco systems has since lost some of its luster. But even though the company's stock price has dropped, Paulson (The Technology M&A Guidebook) makes a convincing case for still using Cisco as a model for how other companies can manage their M&A (merger and acquisition) growth. For one, Cisco buys companies not just when it is trying to expand or protect itself against potential customers, but rather "as an integral part of its system," thus looking ahead for future growth. Indeed, Cisco's acquisition have been prolific, and the author explains who the company targets for acquisitions and why. Unlike many acquirers, Cisco tries to retain most of the personnel during an acquisition, and Paulson shows how that makes good sense. According to Cisco CEO John Chambers, "If you pay $500,00 to $2 million per person--and you lose 30 to 40 percent of those people in the first two years, you've made a terrible decision." Paulson shows most of Cisco's major acquisitions and the buying price per employee, which appropriate for a book on M&A's, of course, but he is too meandering to offer specific, helpful information. Those interested in refining their company's M&A strategies won't find too much here to help them; Paulson makes a great case why Cisco is good at what it does, but aphorisms like "[Cisco] listens closely to its customers" are less than effective. Such lines suggest that the book is targeted more at a general business audience, but how many of those readers actually need advice on how to buy companies? (Publishers Weekly September 10, 2001)
From the Inside Flap
Networking giant Cisco Systems is a dominant technology company with $19 billion in fiscal revenues and 30,000 employees. Yet, despite its size, Cisco retains its entrepreneurial spirit, responding to marketplace demands with remarkable speed using a combination of product innovation and technological advances. Inside Cisco provides a Silicon Valley insider's view of the company's core strategies with emphasis placed on Cisco's "Gold Standard" acquisition practices.
Critical to Cisco's historical success has been its powerful commitment to expanding its product line and level of expertise through smart acquisitions. With Inside Cisco, Silicon Valley veteran Ed Paulson delivers the unique M&A philosophy of Cisco Systems and outlines the management and financial procedures used to create these acquisition successes.
Beginning with an examination of a corporate culture specifically designed to acquire and assimilate other companies, Inside Cisco explores every aspect of the firm's acquisition and development (A&D) process, refined through Cisco's deals with over seventy corporations. Through extensive research as well as access to current and former Cisco executives, Paulson reveals how Cisco buys companies for their people, technology, products, and intellectual capital and not simply as a financial operation.
Inside Cisco gives the business and finance world an inside peek at how Cisco has consistently profited from its acquisition strategy, as have the companies it has purchased. The book deciphers the company's primary growth and profitability strategy and reveals the three key elements of Cisco's approach:
* Using acquisitions as a strategic weapon for increasing market share while enhancing customer satisfaction
* Targeting companies that provide the best fit for Cisco's own strategic direction and corporate culture
* Determining success based on the level of post-purchase retention and the integration of newly acquired personnel and intellectual capital
Paulson's detailed examination of Cisco's acquisitions process provides excellent background for business and finance executives intending to use acquisitions as part of their company's growth strategy. Insightful and comprehensive, Inside Cisco reveals one of the most successful acquisition approaches in the business world today and provides an M&A best practices guidebook that can be applied in any industry.
From the Back Cover
According to Cisco CEO and President John Chambers, when a company acquires technology-any technology-they are also acquiring people. In order for an acquisition to succeed, a company not only needs to be careful in the selection process, but also needs to have a culture in place that accepts the acquisition as quickly as possible.
Buying a company is easy. Making a success of that company post-acquisition is something else altogether and often meets with costly failure. No other company has used mergers and acquisitions as a strategic weapon more effectively than Cisco Systems. Throughout its acquisition of over seventy companies, Cisco avoided significant employee turnover and successfully leveraged the acquired firm's products and technologies to enhance Cisco's revenue growth.
In Inside Cisco, Silicon Valley insider Ed Paulson profiles Cisco's growth-by-acquisition strategy and the key people who molded Cisco into a business designed to acquire and assimilate other companies. By providing a behind-the-scenes perspective of its acquisitions, Paulson's investigative analysis of Cisco outlines a strategic and operational M&A framework that can be applied in any industry.
About the Author
ED PAULSON is the President of Technology and Communications, Inc. He is a ten-year Silicon Valley start-up veteran who previously worked with several executives instrumental to Cisco Systems's incredible success story. He is the author of over ten business and technology books, his most recent being The Technology M&A Guidebook (Wiley). Currently a Visiting Professor of Business at DePaul University in Naperville, Illinois, his professional background spans over twenty years as a business manager, engineer, and entrepreneur in both Silicon Valley and Austin, Texas. He can be reached at www.edpaulson.com.
