Leveraging Vendor Mergers and Acquisitions

Written by: Luis Curet, VP of sales for 8e6 Technologies

I like to break down vendor mergers and acquisitions into two categories: those that are “benevolent” and aim to develop a technology by purchasing it, and those that are “horizontal mergers” where a company removes market competition and gains market share through acquisition. In the latter scenario, someone is losing a product. Of course, it never starts out that way. Initially, press releases and interviews with executives focus on synergies and benefits and how both companies complement each other. That kind of rhetoric might go over well with the market and a few analysts, but solutions providers for the merged companies immediately want to know: “What happens to our product?” The vendors usually respond, “We have a great new product for you to sell.” That means one product will be phased out of development and no longer supported.

After progressing through the standard reactions of denial, anger, fear and more anger, acceptance usually kicks in. Two choices remain. Get on board with the new product and figure out a plan to convert existing clients, while selling against the new competition of solutions providers now offering the same product, or find a new solution and figure out a plan to convert existing clients before they get postcards from the acquiring company suggesting that the product they use is going to obsolete in 24 months.

Here are some strategies for both of those choices:

If You Can’t Beat ‘Em, Join ‘Em
Assimilation might not be all that bad for some vendors and VARs, particularly if the product left standing is superior. For others, getting up to speed with a new product while simultaneously managing the declining service and support for an existing product — possibly for years — isn’t easy and certainly isn’t enjoyable. But, if you decide to go with the ‘convert and create’ option, you need to win over your existing clients and simultaneously create new ones in the market. It’s important to understand that existing clients likely have progressed through the same denial, anger, fear — and lots more anger — as you, and they represent your best sales opportunity. Getting new clients to purchase the product from you will likely prove more difficult, presuming that more people are now selling the same product. So how do you stand out? Add value.

For example, if the acquisition scenario impacts a solutions provider within the internal threat management niche, key differentiators are knowledge and service. Busy, overworked IT staffs will gravitate toward the solutions provider that willingly and regularly provides expert advice on things like threshold settings, best practices for categorizing sensitive data (data leakage) and how to implement an acceptable use policy system for an organization of similar industry and size (including documentation, implementation and training of internal staff during system-wide rollout). Best practice data, sorted by industry and size, is available through the product vendor and requires only slight modifications to make it look like your information. Value-add customer set-up and consultation services like these are highly desirable and can differentiate you from everyone else selling the same product. It’s important to consider that while you may not be able to charge more for value-added service supporting mature products (in contrast to newer technology requiring a steeper learning curve), providing that service increases your chance of winning the bid against another reseller who is pushing the same product.

Going With A New Product
The impact of a merger or acquisition may send you looking for the ultimate differentiator: a new vendor solution. Interestingly, a common byproduct of large acquisitions is the emergence of alternative solutions and competitors who offer better channel margins and cater to the market’s need for product differentiation. Solutions providers choosing to buck convention and blaze a new path with an alternate product face both opportunity and challenge. The challenges are obvious. How is the product different from the best sellers and what innovations can you push in your attempts to overcome prospects’ reluctance to stray from the comfort of familiarity (even if there are features and benefits they long for)? What is the product’s quality and performance track record? What kind of installation and training are required? And the critical variable: how supportive is technical support?

If these and other questions are answered to your satisfaction, then offering a new product in a market segment hungry for choice can afford plenty of opportunity. In fact, if the product demonstrates better features and benefits, you not only gain the advantage of offering one of only a few alternatives in the market space, you can charge more for it. Viewed this way, acquisitions aren’t necessarily things to fear as a threat to your business, but perhaps as the catalyst toward taking your company to the next level.

Mergers and acquisitions will continue to alter the product landscape. For the solutions provider, the question remains: will you merely adapt to the new environment or smartly capitalize on the new opportunity with differentiation?

Luis Curet brings over 25 years of experience in business development and security technology to his role as VP of sales at 8e6 technologies. Mr. Curet is responsible for all customer touch points and will drive new business development as the company expands their growing Insider Threat Management portfolio. Prior to joining 8e6, Mr. Curet was a senior VP at Clearpath Networks, where he increased revenues five-fold for the company’s new SNAP VPN product line, while also closing major agreements with Fidelity International Information Services, Hughes Communications, IBM, and British Telecom. Mr. Curet has been a frequent speaker and panelist at technology trade shows and symposiums on the subject of computer and Internet technology. He received his Bachelor of Science in Industrial Engineering from the University of Wisconsin, Madison.