They look to the landscape and eye spy who’s the best ”strategic and financial fit” to EA, and then they’ll decide if it ”makes sense” to acquire them. It’s like bagging yourself a spouse.
Bankers drop a line or two to EA’s Corporate Development branch letting them know who is in a position to be bought. Carolyn Rohde’s role is to meet with such people to network.
”Yes, definitely,” replied Associate Rohde, asked if EA are hungry for more companies.
”If we’re interested in moving into a particular genre of gaming, or bolstering our presence in a certain area, then we’ll look at the market landscape to see who’s performing the best and who, of those companies, is a good strategic and financial fit for EA. Then we determine whether an acquisition makes sense.”
”Sometimes we hear from a banker that a particular company is for sale and we evaluate if we want to own the company or not. It’s sort of like dating – we “date” a lot of companies, but it has to be a fit both ways for us to “marry” and integrate.”
Some of Rohde’s time is spent ”in outward-facing roles. I attend conferences and meet with entrepreneurs, bankers, and VCs to understand the market and network with industry professionals.”
When it’s time for an acquisition - or marriage - then it happens in three stages:
”The first is valuation of the target company. We build pro forma financial models and apply various valuation methods such as Discounted Cash Flow analysis and comparables to understand the true value of the target. This sets up our negotiation to determine how much we’re willing to pay,” she explained.
”Secondly, I’m responsible for managing the deal process internally and with the target – specifically, managing the due diligence process (going through all of their company documents) and coordinating internal meetings with folks within EA to discuss the acquisition.”
”Thirdly, we often have to put together internal presentations to our executives and board of directors for them to approve the deal, so I’m also responsible for putting together those decks.”
She interacts with target companies directly. ”We talk with the management team on a regular basis to ask diligence questions, manage the deal process, and negotiate the terms of the deal. The actual negotiating part is handled by the more senior members in my group, but I’m highly involved with the diligence process and talking with the targets.”
Check out the full Breaking Into The Industry blog post over at EA’s website for more. Big time acquisitions by EA include the likes of PopCap and Playfish which weren’t cheap dates, and had one huge wedding bill.
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