The maturing of industry M&A

It is so predictable. The media flurry around an M&A announcement, the celebratory mood at the acquired company, the speculation around the acquirer’s quarter, the giddy talk about conquering the world, the rumors around “who-next” and “roll-ups”, the debates around valuations. All good fun, but so predictable.

We have come a long way since 2004 when Oracle bid for PeopleSoft. (disclosure: I was an expert witness in one of the litigations that transaction spawned). It is impressive to see how effortlessly Oracle can integrate multiple acquisitions a year – especially for an entity which in the 90s was largely an organic technology company. Not just Oracle – Google, IBM, Cisco, Microsoft and others have shown similar competence.

Even more impressive is how many vendors have managed to calm customers about their traditional doubts about M&A.

Let’s face it – most CIOs are still ambivalent about technology M&A. As most will honestly say, we gave Oracle (or IBM or whoever) a chance to competitively win our business a few years ago and they did not. They are backing into our business with acquisitions. But so long as they don’t disrupt the acquired operations too much and don’t jack up charges too much, it’s not the end of the world. In fact, many see it as an opportunity to negotiate volume discounts. Many also see it as a way to deemphasize older, organic technology from many of these vendors.

This is so different from the mindset in 2004, and certainly the 90s when CA was on the prowl where CIOs would actively seek change in control exit clauses in contracts. They still ask for them, but there is a ho-hum feel to it.

Which is why it is funny to see analysts and bloggers work up a froth over every M&A transaction.