4 ms·

Do these type of transactions ever end up well for either the acquirer or the acquired company?

normac2 4y ago
I think Trello and Atlassian went well (massively different scale, though). I think the rep is that Atlassian mainly does well by leaving the companies alone as independent organizations, more like investment positions rather than actually merging the tech.
lotsofpulp 4y ago
Yes. See Oracle. https://www.macrotrends.net/stocks/charts/ORCL/oracle/market-cap https://www.macrotrends.net/stocks/charts/ORCL/oracle/market...
- the_only_law 4y ago
  Not fair to compare software companies to a law firm.
bombcar 4y ago
EMC bought VMware for $650 million and Dell bought EMC for $74 billion and now sold VMware for $61 billion so it worked out for someone.
- ghaff 4y ago
  The EMC purchase of VMware was probably one of the best tech acquisitions of all time. At least financially. You can reasonably argue whether VMware's overall trajectory was better or worse as a result; in any case, most of the original leadership team ended up departing.
  - bombcar 4y ago
    Someone knew something - that's an insanely low valuation for a major player in the (then just starting) virtualization market. But at the time virtualization was considered as something "to keep that old Windows NT server/software running" - not foundational for all cloud services ever.
    - ghaff 4y ago
      As an IT industry analyst at the time, it may seem like a cheap acquisition today, but it was seen as pretty rich at the time. I'm not sure how many people appreciated how big a deal VMware was. My understanding is Diane Greene didn't want to sell but the VCs wanted their exit. And she was eventually pushed out when VMware hit it big and she was excessively chafing under EMC control.
    - CaptainNegative 4y ago
      > Someone knew something A broken clock is right twice a day, and even EMC CEO Joe Tucci was right once in his lifetime. But don't look at his other acquisitions.
      - ghaff 4y ago
        The Data General acquisition, which got them CLARiiON, arguably saved the company during the downturn--given that belt-tightening really hurt Symmetrix sales.
      - rehash3 4y ago
        Hmm.. EMC (which essentially was Smoking Joe T as the CEO for most its limelight years) did quite well with acquisitions, Data Domain, Isilon, VMware and many more smaller acquisitions. They never bought a company to inherit their cash flow but saw an opportunity to invest and grow their business by adding their amazing sales machinery which was stellar as well.
cmrdporcupine 4y ago
The more important question is whether these type of acquisitions end up well for the customer or the employees. And in that case, I think the answer is rarely yes.
formerkrogemp 4y ago
More than half of acquisitions and mergers fail, depending on the industry.
bluGill 4y ago
20 years ago when I was part of a company that was acquired the executives told us that only 1 in 4 were successful, but they were determined to make us one of the successful ones. (it wasn't) I have no idea if the 1 in 4 number is correct, but it feels reasonable.
crispyambulance 4y ago
> Do these type of transactions ever end up well for either the acquirer or the acquired company? It depends on what you mean by "end up well" and who, exactly, is meant by "acquirer" and "acquired". Yes, they're lucrative and worthwhile from the point of finance people, a rarified sliver of stake-holders and the law firms who buzz around to service all these. If they weren't you would not be seeing them as much. From the point of view of technology advancement, the professionals who want to actually WORK in these domains, and the customers who depend on the products? No. These mergers/acquisitions are at best a mixed bag and more often a downgrade, or worst of all, a career-derailing adjustment.
cdumler 4y ago
The point of massive acquisitions are to enrich company stockholders (generally the CxO's and key management), lock up key engineering talent from the market, and give the manager who lead the acquisition a fat bonus. Generally, everyone else loses. To offset the cost, typically value is extracted from the bought company until the product's value dies. Short term-wise, the people involved will get a lot of money and be gone by the time the consequences cannot be ignored. That said, acquisitions can work if there is due diligence. I'm in a company that has acquired several companies in a related field. Each of the companies have had complementary products, and the cultures were vetted to be similar ours before purchase, ie small groups (30-50 people) who have demonstrated high skill, high trust, and low ego. Finally, there has been an effort keep groups generally autonomous while finding ways to synergize employees and services. There has been a strong feeling of working together. Groups have been willing to share their expertise and experience with other. I guess in other words: the acquisition is a good idea, even if a product is subsumed into another product, there is plenty of real work to go around for employees to do. If you have to promptly fire people "because redundancy," it wasn't being done to improve your position in the field.

I think Trello and Atlassian went well (massively different scale, though). I think the rep is that Atlassian mainly does well by leaving the companies alone as independent organizations, more like investment positions rather than actually merging the tech.

lotsofpulp 4y ago

Yes. See Oracle. https://www.macrotrends.net/stocks/charts/ORCL/oracle/market-cap https://www.macrotrends.net/stocks/charts/ORCL/oracle/market...

the_only_law 4y ago
Not fair to compare software companies to a law firm.

bombcar 4y ago

EMC bought VMware for $650 million and Dell bought EMC for $74 billion and now sold VMware for $61 billion so it worked out for someone.

ghaff 4y ago
The EMC purchase of VMware was probably one of the best tech acquisitions of all time. At least financially. You can reasonably argue whether VMware's overall trajectory was better or worse as a result; in any case, most of the original leadership team ended up departing.
- bombcar 4y ago
  Someone knew something - that's an insanely low valuation for a major player in the (then just starting) virtualization market. But at the time virtualization was considered as something "to keep that old Windows NT server/software running" - not foundational for all cloud services ever.
  - ghaff 4y ago
    As an IT industry analyst at the time, it may seem like a cheap acquisition today, but it was seen as pretty rich at the time. I'm not sure how many people appreciated how big a deal VMware was. My understanding is Diane Greene didn't want to sell but the VCs wanted their exit. And she was eventually pushed out when VMware hit it big and she was excessively chafing under EMC control.
  - CaptainNegative 4y ago
    > Someone knew something A broken clock is right twice a day, and even EMC CEO Joe Tucci was right once in his lifetime. But don't look at his other acquisitions.
    - ghaff 4y ago
      The Data General acquisition, which got them CLARiiON, arguably saved the company during the downturn--given that belt-tightening really hurt Symmetrix sales.
    - rehash3 4y ago
      Hmm.. EMC (which essentially was Smoking Joe T as the CEO for most its limelight years) did quite well with acquisitions, Data Domain, Isilon, VMware and many more smaller acquisitions. They never bought a company to inherit their cash flow but saw an opportunity to invest and grow their business by adding their amazing sales machinery which was stellar as well.

cmrdporcupine 4y ago

The more important question is whether these type of acquisitions end up well for the customer or the employees. And in that case, I think the answer is rarely yes.

formerkrogemp 4y ago

More than half of acquisitions and mergers fail, depending on the industry.

bluGill 4y ago

20 years ago when I was part of a company that was acquired the executives told us that only 1 in 4 were successful, but they were determined to make us one of the successful ones. (it wasn't) I have no idea if the 1 in 4 number is correct, but it feels reasonable.

crispyambulance 4y ago

> Do these type of transactions ever end up well for either the acquirer or the acquired company? It depends on what you mean by "end up well" and who, exactly, is meant by "acquirer" and "acquired". Yes, they're lucrative and worthwhile from the point of finance people, a rarified sliver of stake-holders and the law firms who buzz around to service all these. If they weren't you would not be seeing them as much. From the point of view of technology advancement, the professionals who want to actually WORK in these domains, and the customers who depend on the products? No. These mergers/acquisitions are at best a mixed bag and more often a downgrade, or worst of all, a career-derailing adjustment.

cdumler 4y ago

The point of massive acquisitions are to enrich company stockholders (generally the CxO's and key management), lock up key engineering talent from the market, and give the manager who lead the acquisition a fat bonus. Generally, everyone else loses. To offset the cost, typically value is extracted from the bought company until the product's value dies. Short term-wise, the people involved will get a lot of money and be gone by the time the consequences cannot be ignored. That said, acquisitions can work if there is due diligence. I'm in a company that has acquired several companies in a related field. Each of the companies have had complementary products, and the cultures were vetted to be similar ours before purchase, ie small groups (30-50 people) who have demonstrated high skill, high trust, and low ego. Finally, there has been an effort keep groups generally autonomous while finding ways to synergize employees and services. There has been a strong feeling of working together. Groups have been willing to share their expertise and experience with other. I guess in other words: the acquisition is a good idea, even if a product is subsumed into another product, there is plenty of real work to go around for employees to do. If you have to promptly fire people "because redundancy," it wasn't being done to improve your position in the field.