M&A Seminar Series—Session Eight:
CEO View: "Top Ten" M&A Deal Insights
By Tony Zingale, Dave Orton, Ben Horowitz, David
Healy
1. Build a Great Company First. Maximize valuation by building a great company (not just a great product) that is the leader in its market segment. You can become a market leader by buying companies to fill out your product suite, increase average sales per customer and improve your go-to market strategy (Cadence; Opsware; Clarify; Mercury Interactive) or by using M&A to expand into new markets (ATI; Opsware). The best deals help the buyer to start selling "business value" to customers' senior executives rather than "technology value" to their R&D or IT groups (Mercury Interactive). Shedding weak businesses (Loudcloud's web hosting business) or product lines (ATI's low margin graphics boards) to focus on core strengths is critical.
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