in another sign As the market for technology deals continues to gain momentum, Cisco last month announced its intention to acquire Splunk for $28 billion. The network company is spending a significant portion of its market capitalization on this deal, and while Splunk shareholders welcome the deal and the premium it may bring to their stock, as long as the stock price is any indication, Cisco shareholders seem less enthusiastic. .
From a strategic perspective, the deal is a major win for both teams, particularly as it brings together Splunk's cybersecurity and Cisco's AI and data management capabilities applied to network data. Both companies have the potential to be a powerful combination when brought together, but he believes that merging two large companies is no easy task, and whether the two cultures can be fused will depend on the deal. This will greatly help you measure your success.
It's interesting from an economic perspective. While the recent Klaviyo IPO gave us an idea of how the market values high-growth software companies that go public, the Cisco-Splunk deal could instead give us an idea of the potential value of slower-growth software companies. is shown. So this deal makes a little less sense for startups than this week's public offering, but it's still useful given the sheer lack of liquidity events we've seen recently.
Now that the hype around the announcement has faded and reality has arrived, Cisco investors still don't necessarily seem thrilled with the deal. Perhaps the high price tag scares them off, but they're certainly not responding enthusiastically. The question is, why?
Will they be able to unite without Cisco stopping it?
Ray Wang, founder and principal analyst at Constellation Research, said one of the things Cisco is aiming for is its track record of absorbing the companies it acquires. “The culture issue is difficult, but Cisco is built on his M&A. That's what they do, this is a core competency for them,” Wang told TechCrunch+.
Jevin Jensen, an IDC analyst who follows companies like Splunk, said he thought the combination made sense last year when rumors of a deal first surfaced, and he still thinks so.