Enterprise tech M&A: What to expect during a vendor shakeup
As technology M&As pick up pace, you need to know what challenges you could face - and how SHI can help.
In 2020, the full-year total for global merger and acquisition (M&A) deals, according to Reuters, hit a record $3.59 trillion. That number has already been eclipsed in 2021.
Through the first half of this year, 35,128 deals were announced – a 24% increase year over year.
The sector leading the way? Technology.
Whether it’s the merger of McAfee Enterprise and FireEye Products for $2 billion, Salesforce.com closing its Slack acquisition for $27.7 billion, or, going the other way, Dell and VMware’s impending split, technology, media, and telecommunications enterprises represented one-third of all megadeals in the first six months of 2021, per PwC. And there are no signs of things slowing down – especially in the enterprise software and services arena.
M&As come with a lot of moving parts, and there’s a strong likelihood your organization may face unforeseen consequences as a result.
Here are the most common challenges organizations encounter when their strategic vendors change ownership hands, and how SHI can help you overcome them:
1. Sudden licensing changes
It’s hard to fully prepare for unexpected licensing changes. Unfortunately, they’re par for the course during M&As, and are usually accompanied by a general lack of communication around end-of-life (EOL) and end-of-support (EOS) decisions.
This typically breeds confusion within the end-user organization, its employees, and through the channel. Therefore, it’s imperative you know what resources you have and how to take advantage of them.
Make sure you stay in regular contact with your solutions provider as well as your account managers at the OEM. They’ll be able to answer your questions, clarify any areas of confusion, and make sure you’re getting the most accurate information.
It’s important that you also know what technologies you’re licensed for and what you’re actually using. That way you’ll have a better understanding of what any potential changes mean for your business, what the costs are, and what you can expect moving forward.
2. Operational issues
Acquisitions usually include system changes or migrations. Which means operational issues are bound to occur at some point.
You could face delays in order processing. You could be looking at slowdowns in the availability of new quotations and pricing. You could even find yourself dealing with inaccurate or missing data. But there are ways to get out ahead of these issues.
For starters, consider starting your software renewal conversations early. That way, if ordering systems experience downtime – which can significantly delay renewals or new entitlement distribution – you’re covered. You can also request support extensions and exceptions (which SHI’s presales teams can help facilitate).
As for the possibility of encountering muddled or lost data, make sure you always keep records of your entitlements, licenses, certifications, etc. If you don’t have this information, SHI can provide records of your customer entitlements it’s processed to help mitigate inaccuracies or dispute potentially corrupted OEM records.
3. Moving too fast and causing disruption
During M&As, changes are constantly being made without fully considering the effect they’ll have on customers. Any number of things can fall into this category:
- Half-baked or sudden policy changes
- System changes
- Sloppy transitions to a new support structure
- Changes to how a product is sold
If organizations aren’t totally prepared to implement these changes, that’s when disaster strikes for customers. And, unfortunately, this is all too common.
In these scenarios, it pays to have a strong support system. SHI and other solutions providers can relay feedback to OEMs, informing them about the disruptions these changes are causing. For example, we’ve seen OEMs reverse their decisions to phase out perpetual license options after discussing customers’ concerns with their partners.
4. General price increases
General price increases tend to be another unavoidable consequence of M&As. For instance, a partner may jack up the prices of certain products they don’t intend to support anymore.
Whatever this looks like, you need to be ready. Make sure you have a sound understanding of your budget and again, consider opening renewal conversations early to avoid potential prices hikes.
While pricing is ultimately at the discretion of the OEM, SHI can communicate these changes to you and offer guidance for negotiating with the OEM.
5. OEM customer support disruptions or reductions
Systems aren’t the only things that change during M&As. Priorities can shift as well.
Under new leadership, certain markets might become less important, and certain customer bases may become more expendable. As such, the organization may no longer wish to spend money maintaining these segments, leading to customer support disruptions or reductions.
If you fall into this category, you could see a swift drop in service levels. Having a trusted solutions provider in your corner to provide technical consultations or communicate potential changes to you becomes more important than ever.
6. Account manager turnover
Turnover can mean delays in sales response times and hampered pre-sales support. New faces also mean less historical knowledge of your account. But, make no mistake, it happens. All the time.
If you lose a sales rep, you lose an important point of contact – someone you could’ve developed a relationship with over the years, who knows your business and needs. That can be a tough pill to swallow and can leave you feeling frustrated and lost.
That’s why trust is so important. With a trusted services provider like SHI, you can expect to get the support and continuity you need to counterbalance any unexpected turnover.
Don’t get blindsided by an M&A
According to Reuters, there were $799 billion worth of technology sector deals in the first half of the year alone. You’d better believe more are on the way – which means now is the time to remain vigilant and prepare for any challenges that may arise.
By keeping a thorough record of your account information, proactively starting and managing conversations around early renewals, and working closely with a strong services provider, you can get out in front of any undesirable M&A consequences.
With SHI’s winning combination of world-class OEM support, license advisory and renewals management and optimization services, technical resources, and manufacturer relationships on your side, you can breathe easy knowing we’ve got you covered. Contact us today.