Inside Cisco: The Real Story of Sustained M&A Growth

An insider reveals the core strategies behind Cisco's phenomenal success Most savvy business observers agree that the major component in Cisco's phenomenal growth has been their unwavering commitment to expanding their product line through aggressive acquisitions. Since 1995, the "New Goliath," as Cisco is known throughout the business and finance communities, has acquired more than sixty companies. In this groundbreaking book, a Silicon Valley veteran, Ed Paulson, uses his strong connections to Cisco's management to reveal the M&A gospel according to Cisco. Paulson explores how Cisco has used acquisitions to stay ahead of its competitors, analyzes their strategies and proven methods for incorporating new companies seamlessly, positively, and profitably. Paulson reveals the centerpiece of Cisco's acquisition strategy-one that is company-focused, culturally compatible, and retains staff. He examines how Cisco executives determine if a target company is compatible with Cisco's corporate culture and strategic outlook and describes the extraordinary lengths to which these executives will go to gain the loyalty of acquired people. This book details the Cisco methodology and illustrates how it can be applied to companies across industries. Ed Paulson (Chicago, IL) is President of Technology and Communications, Inc., a business and technology consulting firm and a visiting professor at DePaul University's School for New Training. He is a Silicon Valley veteran with more than two decades of experience and the author of numerous business and technology books, most recently, The Technology M&A Guidebook (Wiley: 0-471-36010-4).

Table of Contents:
INTRODUCTION. 1. SO WHAT'S THE BIG DEAL? 2. BUYING THE CISCO WAY. 3. THE COMPANY THAT SANDY, LEN, DON, JOHN, AND JOHN BUILT. 4. VISION COMPATIBILITY MUST EXIST. 5. WIN IN THE SHORT TERM 6. GOOD VIBRATIONS. 7. MAKE IT A LONG-TERM WIN, TOO. 8. CLOSER IS BETTER. 9. NO MERGER OF EQUALS. 10. TARGET PRACTICE. 11. THE CISCO DUE DILIGENCE "SNIFF TEST". 12. PERSONNEL INTEGRATION À LA CISCO-BAM!. 13. INTEGRATING PRODUCTS AND PRODUCTION. 14. SETTING THE PURCHASE PRICE . 15. CAN YOU REALLY GROW THROUGH ACQUISITION? 16. SO HOW GOOD REALLY IS THE CISCO A&D APPROACH? Appendix A: DUE DILIGENCE STARTING CHECKLIST. Appendix B: VARIOUS COMPANY BUYER TYPES AND THEIR MOTIVATIONS. Appendix C: TYPICAL MOTIVATIONS FOR BUYING A COMPANY. Appendix D: SUMMARY OF CISCO'S ACQUISITIONS. NOTES. INDEX.

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.

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)