EDA M&A: Atrenta acquires NextOp

The news crossed the wires at 8:00 am this morning: Atrenta announced it has acquired NextOp Software, “allowing Atrenta to expand its de-facto standard SpyGlass RTL platform to include functional verification using NextOp’s patented dynamic assertion synthesis technology, and creating a more complete SoC Realization platform.” Financial terms of the transaction were not disclosed.

With the acquisition, NextOp President & CEO Dr. Yunshan Zhu becomes VP of New Technologies reporting to Atrenta Chairman, President & CEO Dr. Ajoy Bose. NextOp Co-founder & CTO Dr. Yuan Lu becomes Chief Verification Architect reporting to Zhu.

EDA luminary Jim Hogan is quoted in today’s Press Release: “I’m glad to see private/private acquisitions like this happening again after such a long dry spell. Atrenta could be leading a trend in renewed growth for the EDA sector.”

I spoke by phone with Ajoy Bose and Yunshan Zhu earlier in the week about the upcoming announcement.

*****************

WWJD: Is this move actually about philanthropy and doing something to reinvigorate the industry, as implied in Jim Hogan’s quote in the Press Release?

Ajoy Bose: Obviously, it’s for business reasons. This is a very synergistic merger which will help us to grow to the next level and give us access to technology and a domain that we were not big in before – functional verification.

WWJD: And what does NextOp get out of the acquisition?

Ajoy Bose: From NextOp’s point of view, they did not have a large channel, so this is good for both sides. And yes, it also aligns with what would be good for the industry.

WWJD: Why is this good for the industry?

Ajoy Bose: Because the notion of roll-ups, and for larger companies to materialize, is important. EDA has a couple of very large companies, so to have some mid-sized companies in the industry is also important.

WWJD: Does that imply your exit strategy would never include being purchased by one of the big companies in EDA?

Ajoy Bose: No, I won’t tell you that. What I will tell you is that we will always do what’s right for our shareholders, and we wouldn’t rule out any opportunities. We will always do what’s good for the company, and that’s the honest answer to your question.

WWJD: You mentioned more channels for NextOp, but if the NextOp technology is that valid and important why wouldn’t those channels eventually show up without this acquisition?

Yunshan Zhu: In fact, we have excellent technology, but given the current size of our sales channel – as you know, it takes time and funding to significantly grow the sales channel. Now we will have the opportunity to work with a world class sales organization that is already there. This will allow us to jump forward quite a few years.

WWJD: Has there been any kind of signed agreement that assures NextOp their technology will be fully supported and nurtured by Atrenta? That it won’t instead be undersold?

Yunshan Zhu: Instead of being undersold, we will now be able to reach out to mainstream customers and grow our current technology paradigm by exploring the synergy with Atrenta’s technology. That is the plan.

Ajoy Bose: It is our intention to fully nurture and grow the NextOp technology and see it prosper. There is no written agreement, if you will, but supporting the NextOp technology is the only logical thing to do.

WWJD: Well, one always has to consider the conspiracy theory that the bigger companies in EDA acquire the smaller ones to shelve the technology, so it won’t compete with some internal initiative already underway.

Ajoy Bose: Yes, but Atrenta and NextOp are not competitors. Our technologies are compatible and complementary, and our over-arching directions and teams are very much aligned.

WWJD: Who then is your competition? Who’s going to lose sleep when they hear your news?

Yunshan Zhu: We have pioneering assertion technology that addresses areas in functional verification that none of the major verification vendors have addressed. And we have a lot of partners, including all of the big three – Synopsys, Cadence, and Mentor. We hope, post-merger with Atrenta, this will benefit all of our existing partners.

WWJD: So no one will be nervous?

Yunshan Zhu: The majority of the market that we serve is in the emulation and simulation domain, and accounts for 80 to 90 percent of the activity. And then there’s formal verification, where our assertion synthesis is very useful to our customers. So in the formal flow, we do have competition with Jasper who announced a product last year with essentially a similar message. If you want to know if we’re competing with Jasper, however, you’ll have to ask them.

WWJD: Ajoy, who do you think is going to lose sleep over the announcement?

Ajoy Bose: We do compete with a number of companies in power estimation and reduction, and in clock domain analysis, but this acquisition is not about a technology that directly competes with those companies. It’s not about head-on competition, but the fact that we are getting stronger.

WWJD: Are you perhaps positioning the company to give the Big Guys in EDA a run for their money?

Ajoy Bose: We have very good relationships with the large companies. There is some level of overlap between us and the large companies, but it is so small they will see more potential for collaboration here than any downside.

WWJD: You have relationships with the big companies, but they do play hard ball so perhaps they will be the ones who will be nervous at the news?

Ajoy Bose: Maybe, but we are still too small for them to worry about, and we haven’t entered the hard ball phase yet. We’re enjoying this period for now where it’s still more about complementary technology, more about partnering than threatening.

WWJD: If we were to have this conversation in 3 years, who would you be acquiring?

Ajoy Bose [laughing]: That’s a very interesting question. We have a position as an SoC Realization company – our dominant play is around RTL analysis, verification, clocks, IP, IP quality, and SoCs. Atrenta will be open to more acquisitions, but we won’t be hugely acquiring other companies. In the next 6 to 12 months, we may acquire one or two others to expand our position in SOC Realization, but to keep it in perspective – we have been looking at potential acquisition opportunities for some time, and it was only been after a lot of scrutiny that NextOp emerged as a good fit. We will keep that approach going forward.

WWJD: How many employees will be coming over to Atrenta with the acquisition, and will NextOp maintain separate offices in Silicon Valley?

Ajoy Bose: Roughly a dozen NextOp employees are in Santa Clara. They will move into our offices in San Jose fairly soon. The other dozen or so employees are in Shanghai, so NextOp offers us the opportunity for a new home in China, to expand our presence in China centered around the NextOp presence there. So there are a lot of additional pluses in this acquisition.

WWJD: Are there any negatives?

Ajoy Bose: None that we know of so far. We are not anticipating any pitfalls.

WWJD: And who will be buying the champagne once the announcement is made on Wednesday?

Ajoy Bose: We are already celebrating today!

*****************

Tags: Ajoy Bose, Assertion synthesis, Atrenta, EDA M&A, Functional verification, Jim Hogan, NextOp Software, SoC Realization, Yuan Lu, Yunshan Zhu

This entry was posted on Wednesday, June 20th, 2012 at 7:17 am. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.