Since 2010, Juniper Networks has acquired several private companies that it first partnered with or invested in. An analysis of their Business Social Graph highlights who the next M&A targets might be.
When Juniper Networks was founded in 1996, the Sunnyvale, California-based company offered high-performance routers for a then-emerging base of Internet users. Since then, the networking industry has seen dramatic changes, and in order to keep pace, Juniper Networks (NYSE: JNPR, Mkt Cap: $11.15B) has partnered with, invested in and acquired a number of private companies to augment and enhance its capabilities.
And Juniper’s history of partnerships, investments and acquisitions provides clues into what they’ll do next. In fact, analyzing the company’s historical partnership, investment and acquisition behavior using the Business Social Graph provides predictive intelligence into Juniper’s next likely M&A moves.
First, some context. Juniper tends to prefer mid-sized acquisitions of private companies (under $200M), and the company has also been keen on partnering and investing in emerging technology companies prior to acquisition. The business social graph reveals Juniper’s push into the competitive software-defined networking market, including a number of strategic partnerships and a key acquisition. Interestingly, these moves by Juniper mirror rival Cisco Systems’ own investments and acquisitions in SDN technologies.
A review of Juniper’s investments, partnerships and acquisitions since 2006 as illustrated below shows deals with companies who are part of the Tech IPO Pipeline such as flash storage provider Violin Memory and network security firm FireEye (which filed for a $175M IPO this week) as well as with earlier-stage startups who’ve just raised a round or two of financing.
A closer look at Juniper’s social graph over time shows the firm’s history of partnering with and investing in startups before ultimately acquiring them. In fact, Juniper participated in the last investment round of three companies in the recent past prior to acquiring them. The average price paid for the three companies was $105M, which is in line with the $120M avg. amount paid for all six of Juniper’s acquisitions since 2010 which had disclosed valuations.
The business social graph also reveals that Juniper is actively trying to stay ahead of disruptive trends in software-defined networking, an emerging industry in which it competes with its more acquisitive rival Cisco. Indeed, Cisco invested $100M in “spin-in” SDN start-up Insieme Networks in July 2012 and then acquired two SDN-related companies in October and December. Below is a chart of Cisco’s business social graph since January 2012, with the aforementioned strategic moves highlighted in blue.
Interestingly, Cisco’s moves were immediately followed by Juniper who acquired SDN provider Contrail Systems in December 2012 for $176M. They also signed a number of partnerships relating to their JunosV Contrail SDN product line highlighting the firm’s focus on SDN as a strategic priority.
Given Juniper’s history of partnering and investing in companies prior to acquisition, the strategy they appear to be pursuing based on recent partnerships and investments and the competitive pressures that Cisco’s moves exert, we’ve identified five private venture-backed companies which Juniper likely has on their M&A radar. A full list of potential Juniper Networks M&A targets can be found on the ‘Research’ tab, after logging in to CB Insights. (Note: The list of companies is only available to CB Insights paid subscribers with access to CB Insider.)