Session 16: November 12, 2008

Mergers & Acquisitions

Guest: Connie Chan (Elevation Partners)

& Mystery guest (Palm Inc.)

Quote of the Day

"You gotta know when to hold them, know when to fold them..."   ~ Kenny Rogers

Summary

When we first met Palm in Session 7 Jeff Hawkins was cleverly using his Intellectual Property to launch a revolution. Now we see Jeff and his trusty side kick CEO Donna Dubinsky in peril again, struggling to stay alive and realize their dream. Up against the wall and almost out of money, Donna and Jeff have to consider various ways to beg, borrow and steal a future. Out of the blue they are confronted with an offer to sell the company. In this case we will examine how mergers and acquisitions can be viable paths for entrepreneurs to achieve their mission - not simply a graceful exit.

Required Readings (Policy on Required Readings.)

• Readings from the Textbooks:
• Technology Ventures (Dorf and Byers): Ch 15 Acquisitions, Mergers and Global Business (Highlights: 15.1-15.2)
• Case:
• Palm Computing, Inc. 1995: Financing Challenges (in course reader)
• Watch the following short video clips:
• Heidi Roizen (Mobius) - The M&A Market
• Judy Estrin (PacketDesign) - Exit Strategies Now and Then
• Elon Musk (SpaceX) - What is the Right Time to Sell?
• Stephanie Tilenius (PayPal) - Acquisition: eBay and Auctionco

Study Questions (Policy on Study Questions.)

• What was Jeffs' mission in starting Palm? Has he achieved it at the time of this case? What stands in his way?
• What experiences have Jeff and Donna had with partners and venture capitalists that might color their receptivity to Zakin's offer? What impressions do they have of US Robotics and why?
• What are the top three reasons Donna and Jeff should reject US Robotic's offer and go it alone?
• Imagine you are an entrepreneur with a relatively successful technology start-up. Several companies are interested in acquiring your company. How would you decide whether to be acquired or not? How would you decide which one to sell to?

Note: Palm has undergone a number of mergers and acquisitions since 1995. Professor Kosnik has coauthored a number of later cases on the company. We will discuss some of the subsequent mergers and acquisitions of Palm from 1995 to the present as part of the class discussion.  We may have a guest from a private equity firm and from Palm to contribute to that discussion.

Team Online Assignment (Policy on Online Assignments.)

• Put yourself in Jeff Hawkins and Donna Dubinsky's shoes. What are the principle one or two positives and negatives of going it alone versus selling to U.S. Robotics for each of the following constituents:
• The investors
• The employees
• The customers
• You, personally

Which of these various points of view is most important in making your ultimate decision?