Deal Flow

Inside the world of M&A, IPOs, and Venture Capital

Justin Hibbard
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April 29, 2005

Symantec: A VC's Best Pal

Sarah Lacy

If venture investors wanted to throw a party for the company that has given them the most returns, undoubtedly Cisco Systems would be the guest of honor. But a close second might be Symantec. The security software company has done close to 50 deals if you count acquiring just technology from companies, all under the watchful eye of chief executive John Thompson- who some institutional investors dub a "deal junkie."

It has been particularly important as security software has been one of the more over-funded sectors of late. An equally over invested sector was storage. And a big buyer of companies there was Veritas, which Symantec is currently in the process of buying. Between the two, they’ve done some 30 acquisitions of startups—some pretty sizable too.

In the near term, these companies likely won't be trolling for deals as they get their house in order. But for all you innovative startups out there, be sure: Thompson still needs your help.

At a keynote at Veritas’ user conference in San Francisco this week, Thompson unspooled his usual grand vision of where the data protection and data access industries are going and why his merger with Veritas fits in perfectly. Thompson has been a regular on the conference circuit as he seeks approval for the merger, so it’s a spiel I’ve heard—and written about-- a few times now. But this time, he seemed to focus more on the role of innovation, describing several futuristic products with, "Imagine you could..." Calling the merger revolutionary, Thompson said, “We’ve only just begun to test the limits of our imagination.”

Given Symantec and Veritas' willingness to buy the imaginative fruits from others, you can bet this merger will spawn some startup activity. So far, I have only heard about one startup that's playing in the area where data availability and data security converge. But if Thompson is right and this is what customers really want, I've got to think there are deal pitches all up and down Sand Hill Road right now. And with the general ennui surrounding most areas of enterprise software—I bet there are some takers. Sure, venture investors always say they’re aiming for an IPO. But the truth is big companies like buying software from other big companies. In a year or two the smart money says even more startups will wind up part of the soon to-be-crowned fourth largest software company in the world.

06:07 PM


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