December 08, 2012 Category: Business & Corporate Law
In business, companies must make strategic decisions based upon competition and future demand of products and services. Business owners in Michigan and elsewhere must constantly be keeping up on the latest trends in order to make decisions to be several steps ahead of the market. Cisco Inc., recently made this type of business planning decision when it purchased Meraki Inc., a closely held business, in order to add more marketable technology to the company’s products and services.
Cisco is the top producer of computer-networking equipment in the world. The company paid for the acquisition with cash combined with retention-based incentives. Cisco is attempting to capitalize on the increase in demand for smartphones and tablets in the workplace. Part of Cisco’s strategy includes broadening the company’s customer base with this purchase, while simultaneously shutting down divisions that are not as profitable. Cisco has also dropped prices in order to remain competitive against rival brands.
Many experts have interpreted the move as a testament to the growth potential of the Wi-Fi market. Cisco had put forth an offer sometime in late October or early November, promising to extend Meraki’s reach with Cisco’s established global distribution channels. Meraki has retained backing from Google Inc. and Sequoia Capital, a venture capital firm. Cisco estimates that it will finalize the acquisition by the second quarter of 2013.
Making an acquisition of another company is a significant move for a business and should be accompanied with careful and strategic business planning. Business owners and executives should fully understand the costs and benefits of making a potential acquisition. They should also be aware of all of the legal ramifications and any additional licenses which may be required as a result of an acquisition in Michigan or any other state.
Source: Business Insider, ” Cisco Buys Meraki For $1.2 Billion ,” Jordan Robertson, Nov. 19, 2012