Makers of telecommunications equipment, software and semiconductors, among other established technologies, must mine sales and profits from easily replicated, low-cost goods. As growth slows, the relentless pressure in high tech to innovate requires rising levels of investment, while the margin for error in setting R&D priorities gets ever narrower. For publicly held companies, the risks are greater still. Corporate leaders are whipsawed by Wall Street's short-term imperatives and longer-term questions about the drift of businesses, technologies and industries. And around the river's bend, as always, lies the inevitable plunge for companies that misjudge the current.

Few dealmakers are more aware of the risks than corporate development chiefs at networking giant Cisco Systems Inc., financial software developer Intuit Inc. and chipmakers Broadcom Corp. and Fairchild Semiconductor International Inc. (See chart below) In many ways, their missions are tougher than those faced by business development peers at Internet, "clean" energy or other tech enterprises in rapidly growing sectors.

As our profiles of these M&A veterans show, certain themes recur: Show creativity in deal prospecting; keep transactions tethered to concrete business goals; to gain an edge on rival bidders, give thought to the needs of an acquisition target's employees; coordinate deals with the skill and brio of an orchestra conductor. Such lessons are instructive not only for other established tech companies but also for any mature enterprise fighting to stay relevant.

Charles Carmel
senior director, corporate business development
Cisco Systems Inc.

Heading up the most active mergers and acquisitions unit at one of the busiest and most successful technology acquirers represents the top of the heap for corporate dealmakers. That fact is not lost on Charles Carmel, who directs the corporate development unit at Cisco that oversees many of the San Jose, Calif., company's most important markets, including the consumer and service provider sectors and digital media, security, wireless and unified communications technologies.

"As a person working in a big company, it's unique to have an impact on an entire industry," Carmel says. "When we get it right, we can change the direction of an entire market."

Many of the deals led by the 33-year-old have been groundbreaking, starting with the 2003 purchase of home networking equipment maker Linksys Group Inc. for $500 million, Cisco's first departure from the enterprise and services provider market and into consumer technologies. He also led the company's 2005 deal to buy set-top box maker Scientific-Atlanta Inc. for $6.9 billion and the March purchase of WebEx Communications Inc., a maker of conferencing technology, for $3.2 billion.

Unlike transactions to enhance an existing area of expertise, they represent big moves by Cisco to expand its business.

"Our new market-entry deals tend to be larger because you need a platform to act as a starting point," Carmel says.

Having dominated the enterprise markets for networking equipment, Cisco has identified several burgeoning technologies, like home networking and Internet telephony, that it hopes will drive growth beyond its maturing core market.

Before joining Cisco, Carmel spent three years working on technology deals as an investment banker with Goldman, Sachs & Co. He later entered Stanford University's business school, which led to a summer internship at Cisco in 2000. Carmel was hired full-time as senior vice president for strategy and corporate development that September.

Carmel says he left banking for life in the executive suite for a chance to try his hand at setting corporate strategy.

"As a banker, your goal is to get the transaction completed," he says. "At Cisco, you're part of the formulation of the corporate strategy that can lead to a transaction."

Of course, being part of a huge company presents its own set of obstacles for dealmakers.

"Cisco has many different stakeholders, and it's sometimes challenging when you have your own vision of the way to push a strategy," he says. "It's not a lone-bandit kind of job."

Zen and the art of M&A
Corporate development pros say the keys to effective dealmaking in technology range from keeping new employees happy to integrating teams of specialists properly
Gary Ignatin	Vice president of corporate development, Broadcom Corp.	"A challenge that we've been reasonably successful at overcoming is being able to recruit an acquired team and creating an environment they actually want to come to. We are never looking to be in a competitive bidding situation, but obviously everything gets easier when potential employees are excited to join your company."
Charles Carmel	Senior director of corporate business development, Cisco Systems Inc.	"The key to longevity in a corporate development role is the ability to balance between being an independent thinker and a contributor to the strategy. If you take either one too far, you end up outside the lines."
Alex Lintner	Senior vice president of strategy and corporate development, Intuit Inc.	"There is no such thing as M&A, really. There are many different processes that fit into it, so you have to know how to work with others who have specialist skills and be able to integrate all those skills. You've got to know that you don't know everything."
Peter Groth	Treasurer and vice president of business development, Fairchild Semiconductor International Inc.	"Every business has corporate antibodies that will fight off things that aren't part of the norm. You don't want people fighting off the things in a deal that are important to you as the acquirer."
Source: The Deal/Tech Confidential

Gary Ignatin
vice president of corporate development
Broadcom Corp.

Gary Ignatin is only eight months into his role as Broadcom's vice president of corporate development, but he's no stranger to the acquisitive chipmaker.

The former Latham & Watkins LLP lawyer started in his latest position at the chipmaker in January, but he has been involved in transactional work since joining the company in February 2000 as an in-house counsel. In that role, the 39-year-old negotiated customer agreements, worked on licensing pacts and handled litigation. In fact, Intel Corp. launched a major trade secret theft lawsuit at the company just days into Ignatin's Broadcom tenure, and he helped defend and settle those cases.

Broadcom was formerly one of the most acquisitive companies in the chip sector and, indeed, in all of technology, but its dealmaking slowed following the technology meltdown in 2000 and 2001. Broadcom last year announced two acquisitions for an aggregate $142 million.

Ignatin says things are picking up. He certainly hasn't sat idle since starting in his latest role. In June, Broadcom announced plans to acquire privately held Global Locate Inc., a maker of global positioning system chips and software, for up to $226 million. It was a tricky way to kick off his business development role, Ignatin says.

"There was a significant valuation gap which was ultimately made up by a fairly complex earnout," he says.

On a broader strategic level, the deal exemplifies the caution veteran acquirers are exercising today, especially those weighing whether to enter new markets. While personal navigation technology is relatively mature, the mobile handset part of the market is greener, so it took Ignatin and his colleagues "a lot of study to ultimately get comfortable with it from a market perspective." Additionally, Broadcom had no specific experience in GPS.

"We've learned to be careful when dealing with an area beyond our core expertise," he says.

But, like Cisco, Broadcom realizes the urgency of expanding into faster growing areas, especially wireless and mobile technologies, after building leadership in core markets, such as set-top box chips.

Broadcom's acquisition strategy is akin to a "blade server" system, where thin computers can be slid in and out of racks, enabling the addition of processing power when needed.

"Broadcom is a chassis, and acquisitions are like plugging in a blade," Ignatin says.

Alex Lintner
senior vice president, strategy and corporate development
Intuit Inc.

Alex Lintner's path to leading strategy and corporate development at financial software maker Intuit was paved with a little serendipity, a lot of nontechnology-related consulting work, and, well, lacy women's underwear.

Before joining Intuit two years ago, the 45-year-old led Boston Consulting Group's West Coast consumer practice, and he was one of the few people at the firm who didn't have a conflict in working with the company. (Most of the BCG's software partners had done work for Microsoft Corp., the firm's largest client.)

Intuit hired Lintner as a consultant and gave him a chance to apply what he'd learned helping to transform Victoria's Secret Stores Inc. from a purveyor of uncomfortable lingerie to what is today the largest retailer of intimate apparel. Two years later, Mountain View, Calif.-based Intuit, known for its TurboTax, QuickBooks and Quicken products, hired him to come in-house.

"We don't want to just understand customers -- we want to become intimate with them," Lintner says. "With software, we observe customers' biggest pain points, then try to get rid of them."

"We know what we want and aren't only going to react to things that will be offered to us," Lintner says. "Great deals get bought, not sold."

In engineering Intuit's largest deal, the $1.3 billion acquisition of online banking services provider Digital Insight Corp. in February, Lintner and Bennett put their heads together during a flight on the corporate jet to discuss opportunities in what the company regards as its "growth anchors." Quicken, the leading financial planning product, became the focus of the discussion, Lintner says.

"Online banking is an inferior product but has 58 million users because its distribution system is superior; you get it when you open an account," Lintner says.

Quicken is the top product in its field, but even liberal estimates put its user base at no more than 12 million. With Digital Insight, "We are going to transport our technology into the online banking world, and we'll have the same kind of market share there that we have elsewhere," he says.

The deal shows how a company like Intuit, the hands-down leader in financial software for individuals and small and midsize businesses, can use M&A to turn its top-selling products into springboards for growth.

The strategy doesn't always work. Intuit's wish to get into payments processing, which would help round out its popular small business accounting offerings, seemed close to being fulfilled when the company announced in December that it would pay $142 million for Electronic Clearing House Inc. But in March Intuit killed the deal after the target became part of a federal investigation into online gambling.

"That was certainly a disappointment, because we believe very much in payments processing for credit and debit cards, and we want to acquire these opportunities," Lintner says. And that means he and Intuit aren't giving up on that business.

"We will announce a deal before the end of the year," Lintner says.

Peter Groth
treasurer and vice president of business development
Fairchild Semiconductor International Inc.

Peter Groth has shepherded only one acquisition in his role as vice president of business development at Fairchild Semiconductor International Inc., but that doesn't mean he hasn't been busy. His mission: Help navigate one of the chip industry's most venerable names through a steep downturn while positioning it for future growth.

The $200 million acquisition this year of Taiwanese power conversion chipmaker System General Corp. was the result of an exhaustive winnowing process that entailed "looking at 100 opportunities, getting excited about 10 and buying one," he says.

The 47-year-old's move two years ago into business development reflected a strategic shift at Fairchild. Before Mark Thompson took the company's CEO post in May 2005, Fairchild's dealmaking focused on expanding manufacturing capacity and market share for its business lines, many of which sold low-margin, commodity-like products. But Thompson, who replaced half of the chipmaker's management, wanted to focus on higher-growth markets.

The System General deal reflects the strategic shift Thompson and Groth are driving. Acquiring the company's power conversion chips, which efficiently convert alternating current to direct current for laptops and other consumer electronics, moved Fairchild deeper into the lucrative high-performance analog chip market. Fairchild has taken a cautious approach to dealmaking. Many acquisitions are available, especially from other chip companies seeking to streamline, but only a choice few make strategic sense, Groth says.

"There's no shortage of carve-outs floating around, but it's never true that one's man junk is another's treasure," he says. "We shy away from deals that would work financially but take lots of time and effort. They become distractions."

Groth's career started as a design engineer at Texas Instruments Inc. In 1986, Groth (whose name is appropriately pronounced like "growth") joined Fairchild when it was a unit of Schlumberger Ltd. A decade later it was sold to National Semiconductor Corp., which spun it out in 1997. After holding marketing positions at Fair­child, he became head of investor relations in 1999, treasurer in 2003 and vice president of business development in 2005.