In 2009 I expect that EDA companies will continue to merge in order to stay financially viable. Here are a few rules and questions that companies should consider following for a successful merger:

  1. Friendliness – This means non-hostile. If you cannot agree to a merger then just move on to the next company or invest and develop the products yourself. I have yet to see a hostile EDA merger succeed and then payback the acquisition costs. Don’t use the press to shame the unwilling company into a merger.
  2. No product overlap – Zero overlap is the best because it truly allows your sales teams to bring new products to the installed base. The only reason that I would break this rule is if your only intention is to buy market share in a narrow market segment and then discontinue the weaker products.
  3. Cultural match – Does each company have the same work ethic? Do you reward employees the same way? Do you both promote from within? Are you both located near the most important customers? Do you speak the same language? Do you have the same ethical standards?
  4. Synergy – Do your products connect together in a flow that makes sense? Can each sales team quickly learn how to sell both products? Are you already selling to the same top 10 accounts?
  5. Organization plan – In the first 30 days you need to announce the new organizational structure, changes to the compensation plan, and any benefit changes. Don’t let your employees second-guess who is going to be running each division, group and product line.