Cross-border acquisitions of U.S. technology assets

California Management Review

Volumn , Issue 3, 2000, Pages 50-71

  Inkpen, Andrew C ^a   Sundaram, Anant K ^a   Rockwood, Kristin ^a  

^a NONE

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EID: 0034386869     PISSN: 00081256     EISSN: None     Source Type: Journal    
DOI: 10.2307/41166042     Document Type: Article

References (31)

1. For what we mean by Silicon-Valley-type technology assets, see note 15 below.
2. Robert G. Eccles, Kersten L. Lanes, and Thomas C. Wilson, "Are You Paying Too Much For That Acquisition?" Harvard Business Review, 77/4 (1999): 136-146.
3. The earliest evidence in this regard was pointed out more than fifteen years ago by Michael Jensen and Richard Ruback in their famous article, "The Market for Corporate Control: The Scientific Evidence," Journal of Financial Economics, 11/1 (1983): 5-50. Subsequently, finance scholars have re-examined this evidence in the context of various types of acquisition activities (e.g., mergers, tender offers, proxy fights, leveraged buyouts, cash versus stock-based offers, and contested versus uncontested bids) and in the context of other countries (e.g., the UK, France, Germany, and Australia). The Jensen and Ruback evidence has held up remarkably well.
4. Amy L. Pablo, "Determinants of Acquisition Integration Level: A Decision Making Perspective," Academy of Management Journal, 37 (1994): 803-836.
5. Rikard Larsson and Sydney Finkelstein, "Integrating Strategic, Organizational, and Human Resource Perspectives on Mergers and Acquisitions: A Case Study of Synergy Realization," Organization Science, 10 (1999): 1-26.
6. For detailed discussions of the M&A process, see Philippe C. Haspeslagh and David B. Jemison, Managing Acquisitions: Creating Value Through Corporate Renewal (New York, NY: Free Press, 1991); Mitchell Lee Marks and Philip H. Mirvis, Joining Forces: Making Ono Plus One Equal Three In Mergers, Acquisitions, And Alliances (San Francisco, CA: Jossey-Bass, 1998).
7. For detailed discussions of the M&A process, see Philippe C. Haspeslagh and David B. Jemison, Managing Acquisitions: Creating Value Through Corporate Renewal (New York, NY: Free Press, 1991); Mitchell Lee Marks and Philip H. Mirvis, Joining Forces: Making Ono Plus One Equal Three In Mergers, Acquisitions, And Alliances (San Francisco, CA: Jossey-Bass, 1998).
8. In 1996, Cisco acquired StrataCom Inc. for $4.6 in stock. At the time StrataCom had $330 million in sales and 1,000 employees. In August 1999, Cisco acquired Cerent Corporation for $6.9 billion in stock. When acquired, Cerent had 210 employees and less than $10 million in sales.
9. Glenn Drexhage, "How Cisco Bought its Way to the Top," Corporate Finance, 163 (June 1998): 21-25.
10. Stephen S. Cohen and Gary Fields, "Social Capital and Capital Gains in Silicon Valley," California Management Review, 41/2(Winter 1999): 108-130.
11. Annalee Saxenian provides clear evidence as to how the cultures of Route 128 and Silicon Valley differ. For example, Saxenian characterizes Route 128 as a continued part of the Puritan culture, where well-defined social hierarchies are important. In contrast, Silicon Valley consists of newer firms with a collegiate atmosphere that emphasized the exchange of information and ideas and also friendly competition. See Annalee Saxenian, Regional Advantage and Competition in Silicon Valley and Route 128 (Cambridge, MA: Harvard University Press, 1994).
12. Homa Bahrami and Stuart Evans, "Flexible Re-cycling and High-technology Entrepreneurship," California Management Review, 37/3 (Spring 1995): 62-89.
13. Cohen and Fields, op. cit., p. 120.
14. Saxenian, op. cit.
15. Red Herring is a monthly magazine based in San Francisco focused on technology issues.
16. The analysis in this section is based on the online Mergers and Acquisitions database of the Securities Data Corporation (SDC). which is now part of Thomson Financial Securities Data. The following SDC-defined sectors represent Silicon-Valley-type assets: all computer and computer-related industries (such as mainframes, workstations, PCs, portables, all computer peripherals, modems, CAD-CAM systems, networking systems such as LANs, software, and computer-related services) and communications-related industries (such as telecommunications equipment, cellular/satellite/mobile communications systems, modems, data communications equipment, internet services, and internet software). The list excludes telecommunications service providers and media companies. If those two were added the numbers would be even more impressive, given that there has been almost $1 trillion in M&A activity in just the U.S. telecommunications service sector in the 1990s.
17. Given that acquirers from the EU are the largest group other than those from the United States, the tables break out the data for this group of countries separately.
18. Note, however, that we are generalizing here based on a subsample of acquisitions: those of target firms whose stocks were publicly traded prior to the acquisitions.
19. Ronald N. Askkenas, Lawrence J. DeMonaco, and Suzanne C. Francis, "Making the Deal Real: How GE Capital Integrates Acquisitions," Harvard Business Review, 76/1 (1998): 165-178.
20. In Silicon Valley, if a young engineer or programmer has been in a job for more than two years, he or she risks being considered stale. Along Route 128, an individual with a succession of 2-year positions is seen as having a poor employment history and as posing a risk.
21. Cohen and Fields, op. cit., p. 127.
22. Saxenian, op. cit.
23. This is a common phenomenon in all expatriate communities.
24. Saxenian (op. cit.) reports that the traditional conservatism of Boston society made it harder for the management and staff of Route 128-area firms to risk dramatic innovations in personal lifestyle or company policy. As a result. New England employees tended to be more family-and community-oriented than their Silicon Valley counterparts and they spent less time socializing with fellow workers. A parallel could be drawn with the employees of European firms and their resistance to networking in Silicon Valley.
25. Michael Bradley, Cindy Schipani, Anant Sundaram, and James Walsh, "The Purposes and Accountability of the Corporation: Corporate Governance at a Cross-roads," Law and Contemporary Problems, 62/4 (Fall 1999).
26. John A. Byrne, "The Corporation of the Future," Business Week, August 31, 1998, pp. 102-106.
27. Eric Nee, "Interview with John Chambers of Cisco," www.upside.com, June 30, 1996.
28. Business Week, op. cit., p. 106.
29. H. Goldblatt, "Forty-Two Acquisitions and Counting: Cisco's Secrets," Fortune, Novembers, 1999, pp. 177-181.
30. Bradley et al., op cit.
31. Indeed, the English words corporate governance and shareholder value have made their way into the French and German lexicons, respectively. There was no prior German language equivalent for the term shareholder value.