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SpeedSim Made to Exit Case Solution

Solution Id Length Case Author Case Publisher
1399 716 Words (3 Pages) Naeem Zafar, Victoria Chang California Management Review : CMR519
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Quickturn was an already established organization and was an industry pioneer in reprogrammable emulation products. The company had top quality verification solutions for companies. SpeedSim, at the time of acquisition, was a small but rather an important player in the cycle based simulation industry. Zafar Naeem, the vice president of marketing at Quickturn is now concerned whether or not the acquisition of SpeedSim was a mistake. It is understood that mergers and acquisitions have multiple issues that need to be resolved, and it is not an easy task. Culturally, both the organizations were different with the startup SpeedSim, centered on a more independent and frugal culture.

Following questions are answered in this case study solution

  1. Introduction

  2. Development

  3. Proposal Solution

Case Analysis for SpeedSim Made to Exit

2. Development

SpeedSim operated with a short term perspective and focused on making one product work well and gaining their place in the market. Being independent, Kevin Ladd, the founder of SpeedSim, had never wanted to return to venture capitalists for more money and wanted stability regarding finances for the organization. Spending was a delicate subject in the organization, and modest expenditures were encouraged by the top management i.e. driving old cars and staying in low cost hotels. This frugal personality of Ladd and Don McInnis, recruited by Ladd to look after the business side, led them to be good negotiators.

Quickturn, on the other hand, was looking to grow through mergers and acquisitions and looked into acquiring SpeedSim in 1995. The sales momentum at SpeedSim attracted Zafar and pondered that SpeedSim’s simulation software would complement Quickturns’ emulation products. There was a need for an advanced simulation technology and acquiring SpeedSim made sense at this stage. The initial negotiations were given a cold shoulder by SpeedSim due to the potential customers in the pipeline that would help increase the company’s worth.

The second round of talks resulted in Quickturn acquiring SpeedSim at a price of $52.5 million that was overpriced. Due to the pressures from Wall Street, Quickturn had to budge in. The price was too much given the size of SpeedSim, and a better bargain could have been sought had Quickturn not been under pressure. Moreover, at the time of the acquisition, SpeedSim had already hit the wall regarding technological development because they couldn’t get into the ASIC market.

Mergers and acquisitions bring along an array of issues if the cultures of the two companies are not compatible. It is important to conduct a cultural audit as part of the feasibility, something that was not done in this case. The two companies had very different cultures. There was a stark difference in size, attitude, and geography that lead to problems that surfaced almost immediately after the acquisition. Integration issues emerged primarily because one was a hardware company and one a software company. Soon after a stream of issues emerged in several areas that highlighted the acquisition

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