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Stand Up And Cheer
Ed Sim has a really good post on what to do when your competitor is acquired. If you run a company and are facing this issue, you really should go read Ed's post.
But I have some shorter and simpler advice.
Stand Up and Cheer. Loudly.
Because the vicious competitor you've been facing off with in the market will be no more. They'll be subsumed into some corporate culture. Their driven entrepreneurial leadership will be counting the days until they are free to leave to start another company and thinking about how to intelligently invest the millions they just made. And the best employees will have their resumes on the street, possibly for you to hire. And their customers will be looking around to see if they should be moving on too.
Trust me on this one. I've seen this movie about fifty times. It almost always ends happily.
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» When competitors are acquired... from Greek Complexity
Interesting comments from BeyondVC and A VC about how to react when one's competitor is acquired. A VC:Stand Up and Cheer. Loudly.BeyondVC:Usually when a competitor is bought at a huge price the first reaction is why it wasn't me. [Read More]
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Tracked on May 10, 2005 3:27:48 AM
Posted March 19, 2005 in Venture Capital and TechnologyComments
I tend to agree, especially keeping in mind that statistically speaking most of the M&As are doomed to failure. I do think though that there have to be good parts in considering the purchase of another company, and not all of them are, de facto, leading to the context you and Ed are presenting. This context is actually only the best case scenario.
I'd say that the best play is to double focus on executing your strategy while speculating the relative easier competitive space. It won't last for too long.
Posted by: Dragos | Mar 20, 2005 6:03:34 AM
This didn't seem to slow down Linksys at all. When they were acquired by Cisco, we all assumed the worse case scenario for them....but it never happened. They continue to be a major force in the low end router market. It's one of the best acquisitions I've seen in a while in the tech industry.
Posted by: Dave | Mar 20, 2005 8:38:01 AM
Hi Fred -
Have been a long time fan of your blog. Good follow-up on Ed's post, agreed 100% with your opinion, albeit my personal experience is limited to Nortel, and you've probably seen this stuff many, many times.
But the key question is: how do you increase your chances from 30% to at least break-even or better? Maybe that will make an interesting new thread.
Posted by: Ronald Gruia | Mar 23, 2005 2:33:11 AM
Fred,
First I agree that about 2/3 of the companies fail to reap financial benefits from M&As. Our longitudinal study of over 2500 companies confirmed the numbers. However close to 70% of the CEOs questioned after a merger consider their merger successful (let's not go there!!!)
NOW: Before opening the champagne... cultures can be measured, compared,and yes managed, and there is no reason to bet that your competition will fail on cultural integration.
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