Cisco Scoops Up AppDynamics for a Measly $3.7 Billion Hours Before their I.P.O.

Just before the software developer AppDynamics was set to launch their Initial Public Offering Cisco puts the kibosh on things and drops a big bag of cash off. $3.7 billion (cash) is what it took to put an end to all this silly talk of AppDynamics going public.

Cisco appears to really like this company because they’re paying a $1.8 billion premium over AppDynamics’ last private equity valuation of $1.9 billion.

What’s So Special About AppDynamics?

AppDynamics develops software to help companies like eHarmony to Expedia monitor their mobile apps and websites for bugs and fix them before customers are impacted. They help companies save millions of dollars and in return they charge a nice fee for this service. The company was founded in 2008, and according to CNBC in the first 9 months of 2016 they generated $158.4 million. This is a 54% increase over the previous year’s revenue for the same period.

Why Does Cisco Care So Much?

Cisco is becoming the old guy on the block and needs to adapt quickly. Cisco grew in previous decades into the behemoth that it is by providing the big switches and routers needed in computer networking that helped to fuel the growth of the internet. Today, instead of buying big branded hardware, companies are demanding commodity equipment that can be run by less expensive software. This is where AppDynamics fits in. They provide software products that are in high demand and this purchase helps Cisco pivot towards the future.

Check out this story from Forbes Magazine on of how AppDynamic’s founder, Jyoti Bansal, came to America from India to pursue his dream and created a multi-billion dollar software empire.