EXIT STRATEGIES: Threats and opportunities

Example:

‘Moreover, etalk’s customer base of over 1,500 contact centres and 35 of the Fortune 100 companies will gain access to the world’s leading technology, offering them a competitive edge over any other solution, based on Autonomy’s unique ability to understand the content of the call.’

Source: https://www.cambridgenetwork.co.uk/pooled/articles/BF_NEWSART/view.asp?Q=BF_NEWSART_156736 Accessed 18th February 2006

Cross selling of products to both customer bases

The selling firm may have a set of products which can be sold into the existing distribution channels of the acquiring corporation. At same time, the buying corporation may have products which are able to be sold back into the customer base of the firm being acquired. Such an acquisition is especially attractive where little additional resources have to be expended to introduce the new products into the existing distribution channels. In these situations, the return on investment for the acquirer can be especially high and the payback on their investment relatively short. The selling firm which can clearly articulate this opportunity is well positioned for an acquisition.

This strategy can also used to effect an entry into a new market where local knowledge and local products can be readily enhanced with the corporation’s own set of products. At the same time, the acquired products can be brought back to benefit the corporations existing distribution channels.

Example:

San Jose, CA, July 8, 2003 – Pericom Semiconductor Corporation (Nasdaq National Market:PSEM) today announced that it has signed a definitive purchase option agreement to acquire the net assets of privately held SaRonix LLC of Menlo Park, CA., subject to the completion of due diligence and customary closing conditions. Both Pericom and SaRonix focus on the computer, networking, telecom and storage markets, have many common major customers and complementary geographic strengths.

Source: https://www.pericom.com/corporate/ accessed 8th September 2003

Example:

Software mergers are notoriously difficult to pull off, from both technology-integration and go-to-market perspectives. PeopleSoft certainly said all the right things: its products and customers seldom overlap, its sales force is in training and is ready to go, it will realize more than $200 million in merger-related cost savings and some of the most popular products will be integrated by year’s end.

Even if the truth is a little less optimistic, a stream of PeopleSoft executives made a compelling case for a successful integration. Indeed, PeopleSoft focuses mainly on sales to large companies while J.D. Edwards’ expertise is in the mid-market, or companies with $1 billion or less in revenue. According to Phil Wilmington, executive vice president of PeopleSoft’s Americas business, that means more cross-sell and up-sell opportunities. “More products mean more revenue,” he says.

Michael Gregoire, head of services at PeopleSoft, says, “JD Edwards looks like PeopleSoft did three years go.” He says only one-quarter of JD Edwards sales come from existing customers. “This is too small. They need to upgrade.”

Source: https://forbes/2003/09/05/ accessed 7th September 2003

While merged businesses may have their own niche markets, they can often have parts of their operations which are similar. These areas would provide cost synergies in additional to the revenue opportunities of cross-selling.

Example:

Also buying their way deeper into EBPP are InteliData and Avolent. The former announced earlier this month that it is acquiring Home Account Holdings Inc., of Emeryville, Calif., its Home Account Network Inc. subsidiary and its suite of Unix-based Internet banking and EBPP products. InteliData, of Reston, Va., already offers remote banking services to financial institutions. The deal gives the company a broader customer base – including credit card issuers – and a fast handle on Home Account’s current client roster, including some of the country’s top financial institutions, such as Bank of America Corp., Citigroup Inc. and First United Corp.

Source: Acquisitions help spur EBPP, by Renee Boucher Ferguson January 22, 2001, https://eweek.com/ accessed 6th September 2003

Example:

For instance, Gupta said, by the fourth quarter, J.D. Edwards’ real-estate management tools will be available to PeopleSoft customers. The latter, as a group, own more than five billion square feet of real estate, said Gupta. “Talk about an opportunity,” he added. Conversely, Gupta said J.D. Edwards users will soon have access to PeopleSoft’s supplier-relationship-management tools. Gupta said J.D. Edwards customers spend more than $50 billion annually on procurement.

Source: https://www.internetweek.com/breakingnews/ accessed 7th September 2003