Fear of Microsoft subsides in mergers and acquisitions arena

Among Microsoft's trials and tribulations in the mergers and acquisitions space, a Microsoft official on Tuesday evening cited fear of dealing with the company as an obstacle Microsoft has had to overcome. "[For a while] there was a fear of dealing with Microsoft and we've worked really hard to try to overcome that," said Marc Brown, managing director of corporate development at Microsoft. This fear existed with both the entrepreneurial and venture capital communities, said Brown.

Brown made the comments at a [Churchill Club] event in Mountain View, Calif., during a panel discussion on mergers and acquisitions that also featured representatives from Cisco, Google, and Accel Partners.

[ [Microsoft and Yahoo recently agreed to partner] in an effort to better compete with Google. | Stay ahead of the key tech business news with InfoWorld's [Today's Headlines: First Look newsletter]. ]

After the event, Brown said he was referring to a time when he started at the company years ago.  In general, people were just scared of Microsoft, he said.

The three technology companies represented on the panel have made waves over the years with their acquisitions.  Cisco is known for numerous purchases, ranging from Scientific Atlanta to Grand Junction Networks; Microsoft has acquired companies such as Great Plains Software and attempted to buy Yahoo, while Google bought YouTube and others.

Panel moderator Steve Smith, senior managing partner with Arma Partners, noted Microsoft actually began with an acquisition. "[Founder Bill] Gates bought PC DOS for something under $100,000 and turned it into a thing called Windows and a company called Microsoft," Smith said.

Panelists discussed their companies' mergers and acquisitions strategies.

"The M&A and acquisitions strategy's pretty straightforward," Brown said. "We are a technology buyer. Most of our acquisitions are of earlier-stage companies."  Microsoft then leverages sales and distribution channels and processes to bring acquired technologies to the widest audience possible, he said.

"What I would say is M&A  is not really the strategy. M&A is the tool," said Charles Carmel, vice president of corporate development for Cisco. "The strategy is really about capturing innovation." Cisco realizes it does not have a monopoly on good ideas, he said.

"We don't start with the idea of what company we should buy. We start with the idea of what should be our growth strategy," said Carmel.

When pondering an acquisition, Google looks at the caliber of leadership being brought over to the company from the acquired venture, along with factors including time to market and opening of new markets, said David Lawee, Google vice president of corporate development. The company's acquisition of Urchin resulted in the Google Analytics platform while Keyhole, also bought by Google, became Google Earth, Lawee said.

Panelists also cited increasing interest in potential overseas acquisitions in places such as China. "There's nothing to prevent us from being as aggressive internationally," Lawee said.

But panelists declined to make any predictions when asked whether the European Union should approve the [planned acquisition of Sun Microsystems by Oracle]. They also would not discuss what impact this acquisition would have on their own businesses.

"Everybody's got their own twists and turns to their M&A activities," Carmel said.

"No comment," Brown added.

Tuesday's event was held at Microsoft's Silicon Valley offices.

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