Technology

The Ex-Banker Behind the $3 Billion Apple-Beats Deal


The Ex-Banker Behind the $3 Billion Apple-Beats Deal

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Apple (AAPL) is arguably the most famous company in the world, but its top dealmaker prefers to stay in the shadows. Adrian Perica, a former Goldman Sachs (GS) banker, sometimes holds meetings with executives of companies he’s interested in buying at an unmarked building adjacent to Apple’s Silicon Valley headquarters, according to two people who have negotiated with Apple. Such precautions are warranted: A February report in the San Francisco Chronicle that Perica had hosted Tesla Motors (TSLA) co-founder Elon Musk at Apple’s main campus set off a frenzy of speculation that the iPhone maker was considering buying the carmaker. “When you’re the gatekeeper at a company like Apple, that puts you in a very valuable position,” says Eric Risley, a managing partner at mergers-and-acquisitions advisory firm Architect Partners, who has pitched Apple on deals.

Since joining Apple in 2009, Perica has upped the pace of dealmaking, culminating in the $3 billion purchase of Beats Electronics, the headphone maker and music streaming service founded by rapper and hip-hop artist Dr. Dre and music industry veteran Jimmy Iovine. Perica “is trusted inside the company and built a track record of getting things done,” says John Malloy, a general partner and co-founder of BlueRun Ventures, which invested in Topsy Labs and Chomp, startups acquired by Apple in the past three years.

The Beats deal is Apple’s biggest to date. Spending on acquisitions jumped 87 percent last quarter, to $559 million, according to an April 24 regulatory filing. That month, Chief Executive Officer Tim Cook said Apple had bought 24 companies in the previous 18 months. It made just two known acquisitions in 2009.

Perica’s responsibilities are growing under Cook, who unlike Apple co-founder Steve Jobs is willing to dip into the company’s $151 billion cash pile to buy companies developing new products and services, amid slowing sales of iPhones and iPads. Apple has been acquiring startups and then shutting them down in order to redeploy employees and technology inside the company. It bought HopStop.com and Locationary in 2013 to improve its buggy mapping software, and the fingerprint-authenticating know-how of AuthenTec, bought in 2012, has been channeled into the iPhone 5S.

Unlike other technology giants, Apple has rarely indulged in big-ticket purchases. In the past year, Facebook (FB) paid $19 billion for messaging service WhatsApp, Microsoft (MSFT) bought Nokia’s handset business for $7.2 billion, and Google (GOOG) spent $3.2 billion on thermostat maker Nest Labs. Until now, Apple’s biggest acquisition was its $404 million purchase in 1997 of Next Computer, the company Jobs started after he was forced out of Apple.

Perica was hired after Apple tried to acquire mobile-advertising company AdMob in 2009 but lost to Google. Until then, the company’s approach to buying companies had mostly been subject to the whims of Jobs. Perica was recruited so Apple could move more quickly on deals. He has since built a rapid-reaction force of former investment bankers and MBAs. “Compared to many other public companies, it was a more professional and streamlined process,” says Fred Wang, a principal at Trinity Ventures, which was an investor in WifiSlam, a mapping-software company that Apple acquired last year. Perica’s team, which on some deals has swelled to include more than 100 staff from across the company, is so well equipped that Apple was able to dispense with the coterie of Wall Street advisers that usually turns up for transactions of this size.

Perica declined to answer questions for this story, and Apple declined to divulge any information about him beyond his date of birth. (He’ll turn 42 in November.) “They put a premium on secrecy that is legendary,” says BlueRun’s Malloy. A West Point graduate, Perica worked as an intelligence officer in the U.S. military and as a consultant for Deloitte before getting his MBA from Massachusetts Institute of Technology’s Sloan School of Management. In a 2001 interview with an MIT publication, Perica copped to having been a wallflower. “Socializing used to be very hard for me,” he said. “But developing good social skills really gives you confidence.”

Kenneth Morse, who was one of Perica’s professors at MIT and now runs Entrepreneurship Ventures, a firm that advises high-tech startups, says his former student stood out. “Some MBAs are pretty self-centered. He’s not.”

Perica is close with members of Apple’s executive team and has been spotted at Golden State Warriors basketball games in seats usually reserved for Apple Senior Vice President Eddy Cue, who has season tickets. Acquaintances say he isn’t interested in the Valley’s social scene. “Adrian isn’t cut from the same cloth as a lot of Silicon Valley corporate development types,” says Matt Murphy, a partner at venture capital firm Kleiner Perkins Caufield & Byers, which has done deals with Apple.

Those who’ve sat across the negotiating table from Perica say he’s a straight shooter who’s wary of overpaying. One entrepreneur, who spoke on condition of anonymity for fear of harming his relationship with Apple, says Perica told him that his employer wasn’t interested in his product or the underlying technology, and just wanted to bring his team onboard to work on a future product. He also offered a lower price than other suitors. The company decided to sell itself to a rival.

The bottom line: Since joining Apple in 2009, ex-Goldman banker Adrian Perica has presided over more than two dozen deals.

Satariano is a reporter for Bloomberg News in San Francisco.

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Companies Mentioned

  • AAPL
    (Apple Inc)
    • $111.78 USD
    • -0.87
    • -0.78%
  • GS
    (Goldman Sachs Group Inc/The)
    • $193.28 USD
    • 1.67
    • 0.86%
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