Pulling the acquisition trigger at the right time for the best price is extremely tricky in the IT industry. Extreme Networks successfully pulled it off not once or twice, but a mind-boggling three times within the past 12 months.
San Jose, Calif.-based Extreme purchased strategic networking assets from Avaya, Zebra Technologies and Brocade Communications for a total of $210 million. Extreme is projecting that these three acquisitions will bring in a total of $545 million in annual revenue for its current fiscal year ended June 30, 2018.
"Saying we got a bargain is an understatement," said Dan Dulac, vice president of product management and strategy for San Jose, Calif.-based Extreme, in an interview with CRN. "We've just been the benefactor of these other businesses focusing on their core competencies and divesting the pieces that defocus them, which happen to provide us more focus in networking."
Extreme partners agreed that the networking vendor played the M&A game to near perfection.
"We've been very impressed with their management team," said David Raftery, managing partner at Integration Partners, a Lexington, Mass.-based Extreme partner. "They have a very clear vision of where they're going, what they want to do and how important it is for their partners to come alongside their journey. … We're very bullish on Extreme."
Extreme's first acquisition was Zebra's wireless LAN and security technology for $55 million in October 2016. That deal provided the enterprise networking company with $115 million in sales in a deal that was accretive to earnings and cash flow for its fiscal year 2017 ended June 30.
Zebra acquired its wireless portfolio 2014 with its purchase of Motorola Solutions for $3.45 billion.
"Zebra's core competencies are really mobile device scanners, mobile printers, these things you see in retail environments, the warehouses, the handheld scanner devices, etc. – that's their core competency. They went out and acquired Motorola wireless. Well, about one year into it, they came to the realization that, 'Gosh, we don't have the sales expertise or the go-to-market expertise or partners to actually go in and compete with wireless against the Arubas, against the Ruckuses, against the Ciscos," said Dulac.
Dulac said Extreme had "tremendous negotiating leverage" when Zebra tried to offload the cost and expense of its WLAN business. Extreme is expecting Zebra's business to generate $115 million in annual sales.
Extreme then set its focus on unified communications specialist Avaya, which in January 2017 filed for Chapter 11 bankruptcy protection.