Integration aims to achieve the best of both

Unlike the asset stripping nature of many takeovers, the message from ADI’s acquisition of LTC is very much one of integration and collaboration. Not only that, but things have gone far smoother than even ADI predicted as Steyerl commented: “ADI and LTC first sat down together the day before embedded world in 2017 so it’s been nearly a year since the acquisition was made. Both companies are pretty large entities by themselves so if you’d have asked me a year ago where we would be in terms of integration I would not have predicted that we would have essentially finished that process.

“We of course had a plan, but it was a very aggressive and you’re never sure if it’s realistic once it is put into place. However, the execution of the integration was very well done and that’s credit to the companies on the one hand and to the technology and product development on the other. Execution is a key theme of ADI and that shows in the level of integration that’s been achieved in such a short space of time.”

Steyerl added that the complete LTC organisation has now been integrated along with parts of the LTC portfolio. For instance, LTC’s mesh network portfolio has now been integrated into ADI’s IoT business unit. As far as certain operational aspects of the two companies are concerned, such as manufacturing, there is still some way to go to leverage and combine which products will be manufactured in which fabs. However, Steyerl highlighted that those plans are already in place and are expected to be completed in around three years.

Challenges
Like any acquisition there are still a number of challenges that exist and Steyerl highlighted that the systems integration and ordering entry system need to be finalised and is still a work in progress. He added: “If you step into the shoes of our customers, they still use the LTC ordering system for the LTC product portfolio, hand in hand with the ADI ordering system. However, that will be integrated by June of this year, by which time our customers will solely use the ADI system which is very well developed and a tool set-up that will allow customers to order the full LTC portfolio.”

While keeping its part numbering the LTC product portfolio will change from Linear Technology to Powered By Linear, which will become a brand of ADI, (in terms of the power portfolio), while other parts of the LTC portfolio such as signal conditioning will be integrated within the other divisions of ADI.

There is also a lot of cross selling that is now taking place via the two sales teams and the LTC sales force has been trained on the ADI portfolio and are now selling the full signal chain. So legacy LTC customers can now be sold the full signal chain rather than solely power.

This complementary element was hinted as perhaps a reason why the integration has taken less time than expected. Jackie Rutter, European Marketing Manager for LTC, commented: “With regards to customer base, for LTC the sweet spot was traditionally SMEs, while for ADI it has been the larger players.” This means that the company is now sup So now supporting all layers from the startup community right through to some of the huge players in the market place. So both the customer base and the product portfolio complement each other. This also means that there will be no discontinued product lines, something that is also a side effect in most mergers and acquisitions.

Another reason highlighted by Steyerl for the integration going easier than expected was that when ADI acquired LTC there wasn’t a lot of time spend on synergy between the two companies from a commercial perspective. He said: “Both companies have been very successful with their respective portfolios and have been very profitable across a number of different markets - and all together we’re serving 120,000+ customers - so we can really leverage off each other. LTC had great customer engagement with some customers, where perhaps ADI didn’t and vice-versa. But now we have both - we have the complete signal chain and combined portfolio, across a broader customer base - one plus one equals more than two in this case.”

Speaking further on the acquisition Steyerl added: “When you look at the history of LTC and ADI, we’ve been selling chips for 40-50 years, and it’s still the base of our core technologies, but at the same time the systems in the markets of our customers are becoming more complex so their expectations are changing - i.e. a need for higher integration at the chip level - software, system knowledge, algorithms, etc - they want more than just a chip. So that’s a challenge faced by both companies who are coming from the chip level, and we understand that’s what the market is expecting and we will be developing that further over time.

“So gaining that system knowledge is a challenging task and that’s why in the past we’ve done that through acquisitions of smaller companies to gain that system level understanding.”

Rutter added: “For two companies the size of ADI and LTC, with different company cultures, to be integrated the way they have should not be underestimated. A lot of thought has gone into it. There has also been zero redundancies which for an acquisition on this scale, is unheard of. Plus you can see the commitment of ADI because if you look at the senior management structure, one of the senior VPs is from LTC, as is the executive team in EMEA, so there’s about a 50/50 split in terms of personnel so there’s been a lot of commitment from ADI and a lot of listening from their legacy team to make the acquisition a success, and a key part of that is allowing creativity, and continuing to support the legacy product portfolio.”

Steyerl concluded: “From an ADI perspective, from day one, we were always preparing for integration, and a key part of that was achieving the best of both. ADI didn’t come in and start dictating what was going to happen. We tried to carefully listen. LTC was and is a very successful company so it would have been completely arrogant and certainly not the right approach to assume that we know best about everything and that we were just going to do things our way.

“So with every part of the acquisition we really tried to ask what would be the best for both parties and that’s really how the integration was driven forward and with a view to planning for the long term.”