Mergers and acquisitions have been a big part of EDA since the beginning. We keep an EDA/IP Mergers and Acquisitions Wiki, it is 13 years old now and has more than one million views. Personally, I have been involved with dozens of acquisitions over my 40 year career, some good, some bad, all are interesting and are an important part of EDA history.
If you have been listening to my quarterly EDA revenue podcasts with Wally Rhines you will know that EDA has been killing it lately with double digit revenue growth. Here is the thing, EDA revenue reports are from the big EDA companies while dozens of smaller EDA companies go unreported. It is those EDA companies that have been acquired at an alarming rate over the past 10 years adding to the big EDA company’s growth numbers. Looking at the Wiki you can see that hundreds of mergers is what made EDA what it is today, three big dogs eating out of the same bowl, not a pretty site (Joe Costello quote).
I think the Siemens acquisition of Mentor Graphics was one of the all-time greats of course. Siemens has acquired quite a few EDA companies since then and will continue to do so, my opinion. From what I have heard the Siemens acquisition of Solido Design Automation (I worked for Solido) is viewed as one of the most successful Siemens EDA acquisitions thus far, to which I agree completely. It was a 1+1=10 type of deal. Siemens also acquired Fractal Technology (I worked for Fractal) which fits perfectly with the Siemens Solido group.
Prior to Siemens I worked for Tanner EDA (acquired by Mentor) and Berkeley Design Automation (acquired by Mentor) so I know them well. One of the most interesting acquisitions I worked on was S2C. A company out of Hong Kong seriously outbid the usual EDA suspects, it was quite an international experience.
So that is what I do during the day, I help small EDA/IP companies with their exit plan which is much more complex than it sounds and my recipe is secret, like the formula to Coke and the Kentucky Fried Chicken secret herbs and spices.
Quite a bit has been written about the Synopsys / Ansys acquisition so I will try and not be repetitive. I also asked Chat GPT about it and the response was absolutely ridiculous.
From my perspective the acquisition has been in process for a while. Synopsys and Ansys have been close partners for some time. There is no real overlap in products and the two companies are quite compatible. So, you have to ask about timing since Synopsys just finished its big CEO transition. The simple answer is that Synopsys was not the first bidder.
In my M&A experience getting the first term sheet is always the hardest and Synopsys is not the quickest to a term sheet. To get maximum value for your EDA company you must have multiple offers. The most I have personally seen is four offers but I usually see three or two offers or sometimes it is a CEO to CEO single offer type of deal.
Considering the top 3 EDA companies, the ones who could pay a premium price for Ansys, my guess would be that Cadence was the first bidder. Siemens has too much overlap with Ansys and there would be anti-trust concerns. The Ansys ($2B in 2022 revenue) acquisition would put Cadence ($3.5B 2022) ahead of Synopsys ($5B 2022) which is a very big deal given the competitive history of the two companies. Synopsys may also be getting out of the software integrity business which would be a revenue hole that must be filled. The Synopsys Ansys combined revenue will be close to $8B when 2023 is reported.
Of course there are many other reasons for Synopsys to acquire Ansys but, if I had to pick one, in my experience ego plays a very big role in M&A and Synopsys has the #1 ego in EDA and it is well deserved, absolutely.
Looking forward maybe Siemens EDA will acquire Cadence? That is the only hope if either company wants to catch up to Synopsys. Then there would be two big dogs eating out of the same bowl, not a pretty sight.
Congratulations Synopsys and Ansys! Well played!
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