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Dealmaking has played a key role in Zebra Technologies Corp. becoming a $4.2 billion company and will continue to be an integral component in the company’s growth strategy, says CFO Olivier Leonetti.

“I don’t want to be dramatic, but I don’t think we’ll be around in five or 10 years if we’re not successful in M&A,” Leonetti says. “I don’t think we would be the company we are today without being successful in past M&A activity.”

Zebra seeks to develop marking, tracking and computer printing technologies that give customers across a wide array of industries a performance edge. The publicly held company has 7,400 employees, more than 4,400 patents and offices in 45 countries around the world. But it won’t be enough to compete in the future, Leonetti says.

“We believe that today, to keep being even more relevant than we are today, we need to keep acquiring software capabilities,” Leonetti says. “How can we provide even more insight with the data we capture?”

Earlier this year, Zebra acquired Profitect Inc., a Massachusetts-based CPG company. In 2014, the company closed a blockbuster $3.45 billion deal for Motorola Solutions’ enterprise business, significantly expanding its product portfolio. These and other deals closed in recent years are part of the company’s deliberate, strategic approach to M&A.

We caught up with Leonetti to talk about the company’s formula for dealmaking success and the role that corporate venture capital will play in the company’s future growth.

What principles guide your M&A strategy?

We are very deliberate about the way we drive M&A. We’re not reacting to companies being presented to us by bankers. We’re obviously looking at these opportunities, but we know what we need to do to deliver sustainable growth and value for the company and that’s how we target M&A. We have a strategic planning exercise being done every year. We are looking at this strategic plan multiple times during a year and targeting technology companies and talent pools which could accelerate our growth. Strategic planning, the way we run it, is a very cross-functional exercise. All the divisions and business functions are involved. We look at technologies, we look at go to market and we look at supply chain consequences. What could it mean to our future and how could it evolve? M&A is something we discuss as a leadership team multiple times a week.

How do you find the right spots to fill with an acquisition?

We know that most acquisitions fail. So far we’ve been doing better more often than not. We have a compass. We know as part of the strategic plan what we want to do and what we don’t want to do. Bankers are contracting us regularly with companies that are for sale and we’ll say, ‘Wait a minute. That’s not part of our strategy. It could be interesting, but it’s not strategic enough. Let’s stay focused.’ It’s about being deliberate, strategic, inclusive and not falling in love with shiny objects. We’re not getting too emotional about targets.

What can happen is the price could go through the roof and based upon the analysis, it’s just too much. We’re happy to say, ‘OK, let’s stop.’ It’s funny so far, when we decide to stop, the seller comes back and we’re able to get a transaction done at the price we want. We are prepared to walk away. You have to have other options. To fulfill a need, you need to have options. If you speak about software, you should have different targets. Knowing you have different targets helps during the negotiation because if this one does not get done, maybe another one can be done.

How do you gauge risk?

If you buy a team, will the new team be fulfilled by being part of our company? That’s one key aspect. We buy talent. Can we retain this talent? As we buy new technology, are we going to be able to understand it enough to deliver on the business case for the acquisition? It’s easy to buy an asset. Financing is not usually a big issue. But can you deliver the full potential of the acquisition by retaining the talent at the target and by operationally leveraging the full potential of the target? We find this is usually hard to do.

What role does venture capital play in Zebra’s dealmaking strategy?

We provide to our customers intelligence about their assets, which could be a piece of machinery, a truck, a box, a patient or an NFL player. We read how all those assets are behaving, we analyze the data and then we provide insight to our customers. The insight could be provided to a human through a particular device or to a robot. That’s what we do.

As a result, we’ve targeted software assets as part of our M&A research. Which companies out there are doing analytics for retail, transportation and logistics, manufacturing, health care? That’s how we do it. Then we would talk to bankers, go to various shows and involve our sales force to identify a set of targets. We imprint where we can invest from a venture fund standpoint. Zebra has a venture fund and we invest in startups, adding technologies which are relevant to the future of Zebra. We invest in a startup, we partner with them and over time determine if they should be part of the broader Zebra.

We place multiple bets investing in different technologies and not all will win. We are very involved with the companies where we invest. Not only to being part of their strategic committees, but also trying to commercialize their products. As you do that, you understand how successful those startups can be because you’re trying to commercialize their offering.


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To learn more about how Zebra Technologies approaches growth strategy, check out this cover story interview from 2014 with Zebra CEO Anders Gustafsson.