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Birth of a tech security giant: a deep dive into cisco’s $28B bet on splunk
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This thesis explores the strategic, financial, and valuation dimensions of Cisco’s $28 billion acquisition of Splunk Inc., positioning the deal as one of the most consequential technology mergers of recent years. Through a detailed merger analysis, the paper examines the rationale
behind the acquisition, the synergies envisioned by Cisco, and the financial health and business model of Splunk. The core of the study lies in a custom-built Discounted Cash Flow (DCF) model, which is used to evaluate Splunk’s intrinsic value relative to the acquisition
price. Drawing from historical financials, market behaviour, and integration risks, the analysis critically assesses whether Cisco’s hefty premium is justified. The thesis also addresses key valuation challenges posed by negative cash flows, high leverage, and a rapidly
evolving competitive landscape in cybersecurity and observability. Ultimately, it aims to shed light on the complexities of valuing high-growth tech firms and the broader implications of such mega-mergers in the enterprise software sector.
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Merger analysis Mergers and acquisitions valuation Enterprise software Cybersecurity