Vendor Mergers and Acquisitions - Signed, But Not Sealed, Not Delivered, Not Yours

  • 12-Nov-2012

Across the different technology marketplaces we cover, we always see a flurry of M&A activity. Vendors have different rationales for their acquisitions -- the motives usually range from sensible to silly.

What exasperates me though is the near universal hype that accompanies M&A announcements. Both the analyst community and media tend to become uncritical cheerleaders when vendors go shopping. There's a kind of collective Stevie Wonder moment: "signed, sealed, delivered, it's yours!" (In contrast, workaday bloggers -- especially those at customers implementing the tools -- usually offer more balanced analysis.)

Based on my previous M&A advisory experience and also the history of M&As in general, I typically approach advising our subscribers in two ways:

  • Provide an analysis of potential post-merger synergies and overlaps
  • Urge caution about the inevitably messy integration road ahead

Here’s what lies behind my healthy skepticism of vendor mergers and acquisitions.

  • Firstly, the odds are heavily stacked against M&A success. Years of research shows that an astonishingly large number of M&As fail. Study after study confirms the same, yet hope springs eternal...
     
  • You don’t declare victory just by winning the coin toss. The game has just started. The long and hard work of integrating people, processes, and products lies ahead -- and most of the time, most vendors fail at this.
     
  • Any potential benefits are not immediate for you as a customer. Only investors and employees feel the immediate impact. Yes, there could be short term disruptions but benefits usually take a while to show up on your radar.

Now, let me ask you this: if your technology vendor announces that they intend to add new features -- but not until a year down the road -- what’s your response going to be? You should be similarly skeptical about promises coming out of M&A announcements.

In short, it's signed, but not sealed nor delivered, not yours, yet...

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"RSG's The Collaboration & ESN Software Research is the most comprehensive and detailed analysis of this rapidly developing marketplace available. Of particular value are the vendor profiles and the authors' depth of knowledge and understanding."

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