According to research that I've done at the Harvard Business Review, and at McKinsey Quarterly, recessionary times are actually times of strategic opportunity. The most successful companies use recessions to build up their market position by acquiring weaker players in order to expand their value proposition and product lines. Riverbed , a leader in WAN acceleration solutions last week acquired Mazu Networks , a network management software company.
Here's the Brockmann angle on this deal:
Strategic Fit [5/5].
Mazu Profiler is a network behavior analysis application that provides information about the interactions and dependencies between users, applications and systems. It provides a business-centric view of the enterprise network that are useful in application performance management, security, virtualization implementation, regulatory requirement and data center consolidations.
Mazu offer a terrific complementary functionality to Riverbed's WAN portfolio since it can provide insight on what applications are used by whom and when, which can lead to more effective tuning of the Riverbed appliances. This gives the Riverbed evangelist another tool in squeezing one more bit of performance out of the network environment, and allows them to advise major application operators on their proposed changes to operations for backup, virtualization and the like.
This is a low-risk acquisition (VCs put in $40 million, but got only $25 million) given the current economic climate, but it can be a motivating platform for employees since it includes an earnout clause based on hitting a $35 million sales target which pays out a $22 million payout.
Timing [5/5].
Although this deal was announced on Inauguration Day (I certainly missed it too), it shows clearly how recessions can be great buyers' markets since it offers such great opportunities for acquiring excellent technology companies at low valuations. This lesson will not be lost on others in this market, so I would expect to hear and write about many more deals in the 1Q.
Customer Demand [4/5].
Modern WANs are complex systems. Each application offers a multiple dimension flow in space and time. Being able to develop a behavior model of the network operation is a powerful idea, and one that many WAN engineers will value and use to develop their 'what if' capabilities. This way, WAN engineers can develop predictive models of performance and correctly advise application managers on strategies and expectations. There is demand for these capabilities and through the Riverbed sales and channel model, it can be brought to a more focused perspective.
Potential [5/5].
Brockmann & Company is bullish on this deal, since it brings new functionality to Riverbed customers. Although not specified in the announcement, Mazu could be a value-added module or the Riverbed Central Management Console application, which is used to configure and manage Steelhead applications. Given the payout, it is entirely likely that this or other integration steps won't happen until sales goals have been achieved so as to not distract the business operation.
