Cisco recently bought AppDynamics, a San Francisco-based software maker that monitors and fine-tunes business systems performance, for $3.7 billion. AppDynamics was scheduled to go public on Jan. 25 but the company had to call off the IPO due to the massive acquisition.

This has been the Cisco's largest acquisition to date. Cisco had its eye on AppDynamics for some time now. "The fact that they were in their IPO process represented a window where we needed to make a decision," said Rob Salvagno, Cisco's VP of Corporate Development.

According to Fortune, the buyout came together in approximately 72 hours and the documents were signed Tuesday afternoon, less than 24 hours away from AppDynamics' IPO. The report furthered that had Cisco decided to make an offer months ahead of the IPO announcement, the company would have gotten a lower purchase price. Since AppDynamics had nothing else to lose regardless if the deal went through, Cisco instead purchased the company for nearly double its $1.9 billion valuation, which it received during the final financing round last November 2015.

Cisco has been trying to stay ahead in terms of technology developments and has been trying to shift its strategy to protect its core businesses. Also, Cisco acquiring AppDynamics fits the company's long-term direction and transition towards software, according to Salvagno in an interview, as reported by Reuters.

AppDynamics will be part of Cisco's the Internet of Things for smart connected devices. Also, CEO David Wadhwani will remain to run AppDynamics, although as another business unit under Cisco.

Hilton Romanski said: "This asset is best in class. We believe this is one of the best teams out there to help us on our journey." He noted that it is important for Cisco to have "market-leading software in our portfolio."

Back in 2013, Cisco acquired the security company Sourcefire for $2.7 billion. It has since made a number of other acquisitions to further expand their reach in the industry.

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