What Does Consolidation Really Mean To The Channel?

By The Business Solutions Network

Today I began crunching the data from a Business Solutions reader survey on the topic of consolidation, mergers, and acquisitions in the channel. The special report will appear in our March issue. Let me tell you right now, we received some great feedback in the survey. Without spoiling the entire report, I did want to share a couple trends I’m seeing immediately.

Oftentimes, when an acquisition takes place, the acquiring vendor will say that it now has increased/improved capabilities, more scale, etc. that will help its channel and end customers. We asked readers to share what they actually experienced. Specifically, what changes in capabilities did they see in their vendor once it was acquired or once it acquired another? The results were sobering. Despite all the positive spin a company issues around an acquisition, 50 percent of solutions providers said they saw no change in capabilities, while approximately 17 percent said they saw a loss in capabilities!

Is anyone surprised? Let’s be real, companies acquire other companies so they can gain a competitive edge, make more money, or reduce expenses. Frankly, while they might be in earnest with the benefits their channel and end users could experience, that’s seldom the driving force behind the event. Money, however, is.

The report will detail how these mergers and acquisitions are helping and hurting the channel, as well as what concerns channel partners now have. For instance, here are some quotes:

“One vendor acquiring my preferred vendor might change why we chose them as partners in the first place. I need to closely monitor this to see if it’s time to evaluate a new partner altogether.”

“Large vendors couldn't care less about the small and medium reseller.” Report sneak peek: 36 percent of respondents say they've experienced more competition from vendors selling direct to their customers.

“The new large vendor does not understand our business. The larger the vendor, the bigger the bureaucracy we have to deal with. Larger vendors are simply incapable of being nimble.”

“Our main concern is if the acquiring vendor limits the R&D spending and product portfolio that the acquired company previously offered.”

“These acquisitions create confusion and uncertainty for enterprise accounts that are dependent on product life-cycles and continuity.”

“The now larger manufacturer is less in touch with the smaller players in their market. The now larger manufacturer often requires a higher product volume to offset their higher overhead, so often products with unique and desirable features for a specific vertical are no longer available.”

And my favorite: “Inter-marriages cause birth defects and insanity.”

Without a doubt, this special report in our March issue is sure to garner some attention. Stay tuned…