What Should You Do When Your Supplier Merges or Is Acquired by Another Vendor?
It’s safe to say that mergers and acquisitions in the legal and professional services sector are not uncommon, we’ve written about the technology considerations here. But what about when technology and software vendors merge? What are the implications for your firm? A spate of recent consolidation announcements has required professional services practices to quickly get to grips with the implication on their firms and their technology suites.
In this very brief article, we focus on three practical steps to take if a software supplier announces a merger or acquisition.
1. Quickly establish relationships with the new entity so you can understand the impact of the supplier consolidation on your firm.
We suggest relationships are forged at three levels:
At an Executive level: Your senior Exec to theirs – to establish the longer-term plans for the business, build senior relationships and obtain contractual understanding.
At an operational level: to investigate if any products in the new suite support your firm’s technology strategy and to understand how your existing systems will be kept up to date.
At a technology level: to ensure your in-house team know who to contact when they need support and whether technology or service SLAs will change.
2. Understand if the product direction still meets your needs.
Do you need to re-assess the specifications of the product against your requirements? If your product will be combined and absorbed into another product suite, you need to understand how this will impact your firm. If the supplier has advertised a roadmap meeting, then do attend to learn about any upgrade plans, impacts on existing software and so forth.
3. Ask the awkward questions.
If the supplier is buying a customer base and plans to migrate you to another product, they are unlikely to tell the market for fear of the product line they have purchased withering on the vine. You’ll need to understand quite quickly how the merger is going to affect you. A merger will always result in change – even if the first press release says “nothing is going to change”. It may improve the technology and the service you receive – or it may mean that your product is going to be quietly phased out. Either way, you need to be in open dialogue with the Executive team to understand how it will affect areas such as:
- Service Level Agreements
- Data location
- Security protocols
- Integrations and existing supplier relationships
What if you are still at tendering stage?
It can be galling when your shortlist of potential suppliers is suddenly reduced following a merger announcement. As well as understanding the impact on the financials (will the quote be honoured?), you need to clarify the roadmap for the product and how it fits into the new company’s product suite in both the short and long term. Will the merger activity mean there is a risk they ‘take their eye off the ball’ when it comes to your project? These are all valid questions and concerns to raise with a newly merged (or acquired) vendor.
Vendor mergers can be great news, leading to product enhancements, more investment in R&D and better customer support, but the trick is to make sure you build relationships at an early stage, so you can understand the impact first-hand and ensure you are on their radar as an important customer. If you work with an IT consultancy you can also use them to pick up the awkward questions for you, protecting your interests and preserving your relationships with the supplier.