How Dallas Became Part of Maxim
Chapter Two- Top Secret Due Diligence
In order for one public company to acquire another, there are a lot of procedures that must be followed to make sure that the shareholders interests are kept in front of mind. It also requires extreme secrecy strategically. If the public gets wind of a sale, its inevitable that the buyer will pay a premium above the market price to entice the acquiree board, etc. Its not unusual to pay 20% over market cap. This was the early days of Sarbanes-Oxley and there was a lot of scrutiny on company shenanigans. In order to preserve shareholder value for Maxim, a complete analysis of what Dallas really was was required. Maxim needed to interview all the VP's, business unit heads, operational heads, financial execs and all the IC designers and senior apps and strategy people. This was about 500 people in total. This all had to be in complete secrecy to preserve the equity of both companies.
Gifford went to college on a baseball scholarship at UCLA and still played baseball for the "Maxim Yankees" in a serious adult league in San Jose. Every now and then, I would run across some very buff 30 year old executive in the halls of Maxim- perhaps with a title of sales manager or expediter. With a wink, a senior staffer in the know, would say, "Yankee". Jack was recruiting ex athletes for mid level positions with the understanding that saturday afternoons would be baseball day. These were all sharp, driven people but I found it funny. Jack hired a lot of athletes for business management and junior executive positions. Jack thought in sports terms with high energy and well thought out strategy. This secret due diligence effort was a good example. One afternoon, he took a chartered Lear Jet full of his senior executives down to Dallas to have a look at the place. This was deliberately a little sloppy and overly public. It was even leaked to the press outlets like EE Times and EDN. The group did take meetings in Dallas with senior execs for a couple of days but the real purpose was strategic. On return, the group settled back to work in Sunnyvale. The press was anxious to hear the outcome and rumors swirled. Jack and his team hadn't actually made up their minds, but the public word was that an acquisition didn't make much sense, there wasn't enough synergy, blah, blah, blah. This calmed the gossip mill, but internal deliberations went on. As the main product strategist for standard products, I was given several tasks to analyze product lines, financials, R&D spending and rates of returns of three of 24 of Dallas's business units. There were about ten other senior staffers throughout Maxim that did similar secretive work after the well publicized exec trip. We had about a week to complete a report that was forwarded to Jack's office. All the rumours about any acquisition of Dallas died down. Inquiries were answered with a probable no or a shrug in the rumour mill.
Maxim had a lot of remote design centers and just lone remote employees. This was somewhat unique at the time and shows a kind of flexibility of management. I was recruited and hired in San Diego as the Field Applications Manager for the southwest. I had been working in instrumentation development for 12 or so years at General Atomic and SAIC. Good jobs but limiting. I was always curious about working for a chip company and Maxim contacted me on an especially off day- the call came from Dave Fullagar- a founder of Maxim and Sr. VP who ran field applications. If you know semi history, he's also the designer of the legendary 741 at Fairchild in the 60's, the part was defined by none other than Jack Gifford. I was a bit starstruck. I had interviewed with a couple chip companies upon graduation (ironically Intersil) but no offers came. I wanted to be involved in a chip company in the product selection, strategy and business development area. In Maxim, this was called "corporate applications" and it sounded perfect. Unfortunately, there were no openings and its not a job where a guy could come in from outside and be effective- you had to grow up some in the culture. They offered me a job in Field Applications as a regional manager for the southwest, a pretty hot area. From San Diego, I was to meet all Maxim's customers in the southwest, provide FAE support and hire 4 guys to cover San Diego, Los Angeles, Orange County and Phoenix and train them up. Once I had this set up, we could talk about a corporate applications job. Fair enough I thought and went to work. I had completed my hiring and training tasks after 18 months and was ready to talk about the next job. My wife was from Tennessee and never was really wild about the west coast. She put up with San Diego as its kind of heaven but she really wanted to get back to her roots in the southeast somewhere with her toddler family of two for all the normal reasons. I looked around and settled on Raleigh-Durham, NC as a good candidate location. I told Maxim i was NC bound somehow and would love to continue with Maxim if they could accommodate it. We negotiated a remote corporate applications position for standard products where I would also cover the growing RTP Area as an FAE at least temporarily. Similar to San Diego, I would hire and train a replacement and see where it went from there. RTP was covered by a guy based in Florida that had all the southeast, a sizeable chunk of business extending from Fla to DC and west out through Alabama and northwest up to southwestern VA. He was happy for some relief, RTP was about 1/4 or his territory's business but was growing fast- Ericsson Mobile Phones, IBM PC Company/Lenovo and Northern Telecom among many others.
What was good in this situation about having senior staffers located remotely from the factory was stealth. There were a couple dozen guys squirreled away that didn't really show up on org charts in a direct way. These people could be tasked to work and even travel for special assignments without anyone knowing. On a friday morning, the CEO's admin, called me and said there was an open return ticket waiting at the counter at RDU for me for that afternoon. Pack for a week- business casual or less- "you'll be a farmer"- flannels and jeans were ok. This was pretty weird, Maxim was a very formal company- engineers wore dress shirts with ties, anyone higher was in a nice suit. We were to check into the Four Seasons Las Collinas Golf Resort- pretty nice digs and be ready for a meeting at 9 pm. There were about 75 people at the evening meeting, mostly remote staffers like me and some senior company muscle, our CEO and a bunch of finance types who I didn't have much contact with. Las Collinas is about a 5 minute drive from Dallas in Farmer's Branch. This Four Seasons would be our remote headquarters to take on the due diligence task. Our cover story was that this was an executive retreat and golf outing for "J Leal Farms". This cracked me up and I would throw random farming words into my public conversations to throw off any spies- "fertilizer!", "tomatoes!" became a private joke for years after.
Over the weekend, we thoroughly interviewed 500 identified senior staff, designers and execs of the company. Interviews were generally 30 minutes and key personnel would have three interviews. Dallas employees streamed in and out of the hotel over that weekend. Interviews started at 8am and went until 9 pm. Some interviews lapsed into Monday with follow ups and clarifications. All the interview evaluations were gathered, sorted and presented finally to the CEO on Monday night. Each of us staff were given a single vote on whether we were for or against, I don't think each was weighted evenly but there was an illusion of democracy at least. The CEO and Sr. VP's deliberated privately that night and Tuesday morning drafted a memorandum of understanding that set a nominal purchase price and made our intentions public. There was an a conference call with the investment community and trade press. Later in the afternoon, a huge warehouse was cleared out that could seat about half of the employees. Giant banners that said Maxim/Dallas magically appeared and all the Dallas employees were lead into a presentation in two shifts to hear about the deal and garner support. All the Maxim staff was introduced briefly. I was still in my "farmers clothes", not having the good sense to think ahead and bring some dress clothes. There was a lot of excitement. Afterwards. all the exhausted stealth interviewers and staff disappeared back to their corners and it was over. After such an announcement, there is a quiet period in M&A. I found this unsettling after all the excitement. Many months of travel to Dallas followed as we trained and met with our new Dallas colleagues. Different Dallas groups were put under senior group managers at Maxim. This went smoothly mostly, there were some inevitable, unavoidable overlaps that were handled pretty respectfully and the rest is history.
The End
This was a great experience in my career.