Telecom mergers and acquisition s the vc angle
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Telecom Mergers and Acquisition s: The VC angle. Oren Zeev Apax Partners January 18 th , 2001. Agenda. About Apax Partners Why M&A? What are buyers looking for? Prepare your business Strategic Investor as a step to an M&A During the transaction.

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Telecom mergers and acquisition s the vc angle

Telecom Mergers and Acquisitions:The VCangle

Oren Zeev

Apax Partners

January 18th, 2001


Agenda
Agenda

  • About Apax Partners

  • Why M&A?

  • What are buyers looking for?

  • Prepare your business

  • Strategic Investor as a step to an M&A

  • During the transaction


Apax partners telecom activities 25 years 7b 150 investment professionals 3 continents
Apax Partners: Telecom Activities25 years, $7B, 150 investment professionals, 3 continents

  • Butterfly (TI) Ceragon Networks

  • Coreteck (Nortell) EZChip

  • tdSoft Jazztel

  • Esprit Telecom (GTS) IPG Photonics

  • Dialog Semiconductor Webraska

  • Fore Systems (Marconi) TelDaFax


Why m a
Why M&A?

  • Buyer’s perspective:

    • Buying a business

    • Integral part of R&D strategy

    • Seller’s perspective:

    • Exit

    • Liquidity – easier to lock in value

    • Selling products to telecom operators is extremely challenging

    • Leverage marketing, distribution, financial power, manufacturing and reputation



What are the buyers looking for
What Are The Buyers Looking For

  • Technology lead

  • Management and technical team

  • Market opportunity

  • Competitive opportunity/threat

  • Fit with buyer’s business/channels

  • Customer validation/momentum

  • Strategic Partners – could be a plus, could be

    a liability


Prepare your business
Prepare Your Business

  • Build it and manage it like a sustainable business

  • Fit with potential buyers’ customers and channels

  • Avoid aggressive vesting accelerations

  • Avoid problematic commercial agreements

  • - use assignment/termination clauses

  • Capital structure – take into account taxation and accounting considerations

  • Chief scientist – limit/avoid

  • Play hard to get – but don’t overdo it

  • Timing is everything!


Strategic investor as a step to m a
Strategic Investor As A Step To M&A

  • Try to get a supportive, but not too dominant strategic investor:

  • Let a VC lead the round

  • Be ware of valuation “kiss of death”

  • Be extra careful in the commercial deal

  • Preferably 5%-15%

  • Option/ROFR/ROFN/ROFO

  • Observer/Director

  • Get 2-3 if you can


During the transaction
During The Transaction

  • Manage your shareholders consensus

  • Take care of your employees

  • Manage the process – don’t let your lawyers/accountants manage it

  • Get interest/offers from more than one – create a sense of urgency and competition

  • Keep your alternatives even after you have a term sheet

  • Focus only on the important issues

  • In stock deals registration rights are very important

  • Leave your ego at home


Oren Zeev

Apax Partners

Oren.zeev@apax.co.il


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