( ESNUG 538 Item 6 ) -------------------------------------------- [04/04/14]
Subject: The secret untold backstory of why BDA went with Mentor Graphics
> - SCOOP I: Multiple spies are reporting similar but conflicting
> news. They all agree Berkeley DA "just got"/"is about to get"
> acquired -- but they can't agree on exactly who bought BDA?!
>
> So IF this rumor is true that BDA has been acquired, I give it a
> 50% chance it's Ansys -- but even I don't believe this 50% because
> Ansys seems so indifferent about EDA -- and a 70% chance it's
> Mentor because Greg and Wally really do know EDA.
>
> - from http://www.deepchip.com/items/0537-10.html
From: [ John Cooley of DeepChip.com ]
One of the subtle "highs" I get from running DeepChip is hearing what my
spies had reported turns out to be true. "SCORE!!!" The other part is
finding out the untold backstory after the news has broken.
BDA was founded in 2001. It raised $11.3 M in 2003 in its first venture
capital round from the Woodside Fund and Bessemer Venture Partners.
 
Later in 2006 and 2007, BDA raised an additional $6 M and $3 M from the
Panasonic Ventures and Western Technology Investment Funds -- but both
Woodside and Bessemer still holds the biggest VC percentage of BDA.
By 2013, BDA has around $15 to $20 million in revenue -- and $28 million
in bookings -- plus over 100 SPICE customers from some big names like TSMC,
Qualcomm, Samsung, Broadcom, NXP, Panasonic, Fujitsu and Toshiba.
By their actions, Cadence management starts seeing BDA as a threat. Rumor
is (not sure exactly who) that either Tom Beckley, CDNS SVP of Custom IC,
or Jim Cowie, CDNS Legal SVP, or that both together had somehow convinced
Lip-Bu Tan that CDNS should sue BDA.
  
Regardless of who's idea it was, the CDNS vs. BDA legal complaint was about
BDA using the common faster SKILL interface to ADE instead of its slower
OASIS interface -- plus some scary language about 25 Does to also be sued:
"3. Defendants Doe 1 through Doe 25, inclusive ('The Does') are
sued herein under fictitious names. Their true names and
capacities are unknown to Cadence. Cadence will amend this
complaint to set forth their true names and capacities
when ascertained."
Which lots of BDA end-users saw as OH MY GOD, WE'RE ABOUT TO BE PULLED INTO
A MESSY EDA LAWSUIT!!!! To no one's surpise, EDA user public opinion was
very heavily swayed pro-BDA and anti-CDNS.
---- ---- ---- ---- ---- ---- ----
Then the battle plays out with BDA on the counter-offensive:
Berkeley's lawyer answers Cadence charges in U.S. District Court
http://www.deepchip.com/items/0523-01.html
BDA tells CDNS "IN YOUR FACE" with new analog characterization
http://www.deepchip.com/items/0524-02.html
Berkeley DA ACE & AFS Mega, Solido variation were #4 at DAC'13
http://www.deepchip.com/items/dac13-04.html
User runs new BDA ACE characterization with Cadence IC6 ADE-L
http://www.deepchip.com/items/0533-02.html
User benchmarks BDA AFS Mega vs. Finesim Pro and HSIM for SRAMs
http://www.deepchip.com/items/0535-03.html
and finally
SCOOP -- Judge dismisses CDNS vs. BDA lawsuit "with prejudice"
http://www.deepchip.com/items/0535-07.html
---- ---- ---- ---- ---- ---- ----
THE UNTOLD REST-OF-THE-STORY
Word is Ravi Subramanian (CEO of BDA) ran BDA with the plan to NOT exit by
being acquired by one of the EDA Big 3. Instead, Ravi's goal was to build
a mid-range company like Apache so he could IPO with a $300 M valuation.
  
His plan was to partly grow by creating more SPICE-related tools plus to
merge smaller players into BDA -- so the rumor is that Ravi was in serious
talks with Amit Gupta (CEO of Solido) about merging their two companies.
BDA would win because:
- Ravi would have an additional tool to sell to his
100+ customers
- Increase # of AFS simulator seats sold to customers,
because variation design chows more simulations.
- Get BDA into memory and std cell markets that Solido
is strong in that BDA was trying to make inroads in.
Solido would win because:
- Amit gains fast entry to BDA's 100+ customers to sell
their Variation Designer. It also pushes out Solido
rivals like MunEDA, ProPlus, and Cadence.
- Amit gets immediate access to a bigger sales channel
while he can still focus on custom design R&D.
It would have been a good first step towards a $300 M+ Apache-like
company.
---- ---- ---- ---- ---- ---- ----
NEWS ALWAYS COMES IN THREES
Then, as fate would have it, 3 tipping-point events hit changing everything:
1. Cadence filed the lawsuit. All of Ravi's focus was in running
his company and dealing with Cadence.
2. Cadence settled -- and then rumor is Mentor made an immediate
offer to acquire BDA. Ravi turned it down.
and here it comes, #3
3. Remember the Woodside Fund and Bessemer VC's? The first BDA
investors from back in 2003? The gossip is although Bessemer
wanted to go-the-distance for an eventual Apache-like BDA IPO,
the Woodside Ventures fund was end-of-lifed plus it didn't
have additional capital to invest.
That is, Woodside was looking for an immediate exit, both to cashout and to
avoid being diluted later because they didn't have more money to invest.
  
So suddenly Ravi Subramanian found himself back to talking to Wally Rhines
and Greg Hinckley about what $$$ terms MENT could offer and "how soon?".
From what my spies tell me, MENT paid $45 to $50 million, which gives BDA,
with $15 to $20 M revenue, roughly a 2.3X to 3.3X multiple. Rich Valera of
Needham & Co has a research note that confirms this ~3X multiple.
Other rumors are:
- BDA has laid off all sales guys, but kept all their FAEs and R&D.
- BDA is keeping its DAC booth but is just adding a Mentor Graphics
logo to it.
- BDA's legal bills were close to $1 million. Being in the MENT
family means no more lawsuits from either Lip-Bu nor Aart. The
Big 3 generally don't sue each other because they each have
billion dollar war chests to defend themselves with. They usually
only sue small rival start-ups in order to damage them with soul
crushing legal fees. (Ain't the U.S. legal system the greatest??!)
- Everyone (even analysts like Rich Valera of Needham or Mary Olsson
of Gary Smith EDA or a mess of EDA users) all agree that this is a
merger where Ravi Subramanian and his BDA guys will be given free
reign to build a killer custom division within MENT to directly
compete against SNPS in SPICE and Cadence in SPICE, AMS, and custom.
That is, NO ONE thinks this is a SNPS-LAVA merger where the victors
crush the acquired. Quite the opposite, in fact.
- VC's put in $20.3 M. BDA sold for $50 M. It's good to see EDA
investors get a 2.5X return.
---- ---- ---- ---- ---- ---- ----
DIDN'T SEE THAT COMING
So, long story short, Gary Smith reports this space where the BDA tools play
in grew 12% to $776.6 million in 2012 plus one of his staff adds:
"The long-range CAGR outlook for Analog/MS/RF and Custom tool
revenue through 2017 is 4.7 percent growth."
- Mary Olsson of Gary Smith EDA
And waaaaay back in 2012, Cadence owned AMS/Custom and a bit of SPICE while
Synopsys/Magma kicked ass in SPICE with 9 different simulators. Mentor had
an embarrassing 1% of these tool sales back then.
People will say this all changed in 2014 all because an unknown CDNS bigwig
convinced Lip-Bu to sue BDA -- plus also to threaten to sue BDA (and CDNS!)
customers along the way in an exceptionally stupid lawsuit -- thus making it
impossible for BDA to ever join Cadence. D'oh!
  
And due to an unexpected twist of fate where the Woodside Fund end-of-lifed,
Greg and Wally got to pick up a group of killer SPICE/custom R&D and FAEs
who'll go after Virtuoso, ADE, and 9 flavors of SNPS/LAVA SPICE with a blood
lust in their eyes. Users want an alternate tool supplier to CDNS and SNPS.
Looks like BDA/MENT will soon be it. Sorry, Lip-Bu. Sorry, Aart.
- John Cooley
DeepChip.com Holliston, MA
---- ---- ---- ---- ---- ---- ----
Related Articles
Does Cadence-Berkeley lawsuit mean some ADE users will be sued?
So far public opinion is strongly anti-Cadence on CDNS vs. BDA
SCOOP -- Judge dismisses CDNS vs. BDA lawsuit "with prejudice"
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