Making Mentor Out As the Bad Guy?
In the last few days, I’ve run across several stories – one in the local paper and others in blogs – that seem to suggest that Mentor deserves no sympathy in its attempt to fend off the hostile takeover by Cadence since Mentor is itself in a hostile takeover bid for a smaller company called Flometrics. [BTW: Daniel Payne's "EDA Thoughts" blog first raised the issue of Mentor's attempted acquisition of Flowmetrics back in early May.]
This seems like an overly simplistic argument. Let’s face it: Like it or not, hostile takeovers are a way of life in a capitalistic market. They are just another business tool. Instead of focusing on such emotional issues as which company has the nicer CEO or the more engineering-friendly environment, serious journalists and bloggers should try to answer such questions as:
- Why is a hostile takeover technique being used? Have other options been exhausted?
- Why is the takeover being initiated now instead of 6 months ago?
- Is the goal of the takeover to secure market share or intellectual property that clearly fits into the business strategy of the aggressor company?
- Or is the takeover being used to hide diminished earnings or other financial problems, i.e., is the takeover a diversionary tactic to divert attention from a lack of innovation, decreased market share or price share of the aggressor?
Just because a company engages in hostile takeovers doesn’t make it a bad company… or a good one. What makes the aggressor a bad or good company is the reasons behind the takeover bid as well as the past history of similar takeovers.