[apohn]

I've worked for companies that got acquired and also acquired other companies.

Year 1 is usually nothing and things stay the same unless there is some serious fat that needed trimming. The interesting years are 2 and 3. That's when the parent company tries to optimize things (e.g. streamline the sales force), create synergies, etc and you start seeing the changes. Depending on where you are in the acquired company, it can be heaven or hell.

I'd like to read blogs about the acquisition at the end of year 2.

[dkarl]

The interesting years are 2 and 3. That's when the parent company tries to optimize things (e.g. streamline the sales force), create synergies, etc and you start seeing the changes.

In my one experience with acquisition, that's when upper management's bonuses got tied to "synergy" metrics and suddenly everybody had to learn a new relationship to reality. Almost everything we did for a whole year was dedicated to gaming those metrics, and our independence as an organization depended on supporting upper management's assertion that we were saving tens of millions of dollars. The opportunity cost in product development was enormous, but it was subtly and not-so-subtly communicated to us that now that we were part of BigCorp, we shouldn't worry about small time stuff like keeping things working and making customers happy. At least not in the reflexive, focused way we had before. Making and keeping deals was 15-dimensional chess to them, and they would tell us exactly if, when, and to what degree the dimensions of quality and product delivery mattered. Meanwhile we should do as little product work as possible and focus on the goal inflating executive bonuses by claiming imaginary synergies through integration.

[apohn]

>Making and keeping deals was 15-dimensional chess to them

I've supported sales cycles at small and big companies. I think this is one of the best one line descriptions of what really happens when big companies want to "sell to the CIO" or retain a large existing customer. Sometimes actually solving customer problems is not even 1 of those 15 dimensions.

[chii]

It's dysfunctional all the way down.

The CIO being soled to isn't interested in "solving the problem" of their organization either. They have their own metrics, and so on goes the rabbit hole...

[new12345]

It seems like the moment big corps acquire a well performing product, product starts to loose its value, like trying to move a viscous liquid between containers using a sieve. Eventually, acquired product quality get completely destroyed and it end up creating gap in market that product was serving. I think its good for new product startup as it creates opportunities for them. Its like nonterminating cycle of creation and destruction.

[1290cc]

And this is how its always been. Its similar to some kind of natural life cycle. All those founders out there seeking problems to solve? They just need to look at what big tech is acquiring and begin building a competing product. Often times the clients of the acquired company aren't pleased about having to a new relationship with Big Tech Co either.

[bitsnbytes]

Yep thats exactly how it goes. I have been in 3 companies that have been acquired and currently in 1yr mark of getting acquired with the current company. Thats exactly how it goes.

Interesting enough I had the displeasure of getting acquired by IBM and the first yr not bad. By year 2 to 3 and being fully converted to IBM culture I can tell you that most of the original employees of the company bought out had all left willing.

I left as well and I couldn't be happier. By far working as a senior level (forgot what band now) engineering consultant for them was one of the worst experience with a company.

They even tried to use legal action to prevent me from switching to another company.They also tried to stall me and BS me long enough for the offer to go away.

I gave them a chance and they matched the offer and terms. 6 months later IBM tried to change the terms of our agreement thinking the other offer was gone and I was at their mercy.

What they didn't know was the other company had been pursuing me for years so I called them and asked if they were still interested. They said yes and I took it. Put in my 2 weeks and IBM tried to stop it with legal actions. Luckily they weren't successful. They even wanted to go after the other company for pursuing me and asking who was the contact. I never told them who it was and said thanks but no thanks I'm out.

IBM was a horrible unethical company to work for IMO.

Run if you can and run early before the max exodus that is surely to come and your industry is flooded.

The funny thing was the day we found out that IBM bought us out one of my colleagues quit right on the spot. Myself and our supervisor at the time were surprised and thinking he was crazy to quit with out even giving them a try. Looking back now I would do the exact same thing if I were to find out IBM purchased our company.

I don't recall ever hearing anything positive from any of my IBM colleagues before,during, or after I left. Actually many former IBMrs called me trying to get out. It was the only company where I had worked at that had a constant bad juju feel about it and inundated with negativity from all the employees.

With other companies that bought us out the process was the same: yr 1 no changes, 2 little changes , 3 you are the new company. I actually stayed with the other companies , the only one I left was IBM. So the acquisition itself doesn't mean that it has to be a negative thing. In my situation the only time it was negative was with IBM.

[fatnoah]

I ran Engineering for an acquired company and that's pretty much exactly how it went down. You may have actually named the company in your post!

Year 1 was business as usual with things not changing a lot, but some integration work starting. That morphed into "we need to rewrite all of your software to make it better" which then turned into what turned into "build exactly the same thing but in a different language". We were a remote office and as attrition occurred, headcount was either not replaced or replaced by an equivalent at HQ. Morale and productivity were in the toilet with the prospect of basically a line-by-line rewrite that merely translated things to another language without actually addressing existing technical debt. I ended up walking away from almost 7 figures worth of unvested stock.

[gaius]

My experience of having been through 3 acquisitions: the person driving the process from the acquirer who says nothing will change genuinely believes it.

But a year later he will have moved on to his next role and the business unit the aquiree became now reports to a manager who doesn't see why you are "special" and should be treated any differently to her existing department. That's when things really change.

[kodablah]

This always seems to happen because the drivers of the company usually get tired by that point or the large portions of their please-stay incentives have been realized and they leave. I've seen it happen w/ an IBM acquisition just like this one. While they don't "blue wash" things as much as before, years >= 2 are where what the company previously did stagnates and what exists is leveraged to the maximum to satisfy enterprise sales needs.

[zellyn]

So right! It's been a career-long joke to me to contrast the language in the merger press release about immediate “synergies” and “efficiencies” with the “com.oldcompanyname.foo.bar” in the code 15 years later.

Basically the “immediate efficiencies” are laying off the recruiting and payroll people…

[kpil]

I think in most cases the synergies are thinning out rather fast, and the only positive effect that truly grow is financial muscles. If you do not depend on aggressive funding I suspect growing inefficiencies and complexities are the major forces.

An example from a customer that confided that after merging 8 national processes for reporting to various government agencies, the total running cost was unexpectedly almost 8 times higher than before due to the increased complexity and the amortised investment.

I suppose people know this, except the worst kind of bean counters, so this move is primarily motivated by “product brochure“ enhancement, absorbing a competent competitor that show some promise in a strategic area for IBM. The OpenShift business is just another mainframe in IBMs rather long history of "hybrid cloud“ strategy. They've been doing it for 50 years.

[mholmes680]

I've been part of 6 separate buy-out/merger/acquisitions (from both angles). In year 3 of current one.

The event, whether you are acquired or acquiree, presents significant and unique opportunities to move vertically and/or horizontally to improve your situation. If you're sitting there wondering about job security then you (a) didn't have job security in the first place; (b) are wasting everyone's time, including yours.

[kodablah]

I don't think job security is the concern, I think job enjoyment and personal fulfillment is. For many here that I gather can work just about anywhere they want, sometimes the movement direction to improve your situation is outwards. The real time waste in several cases is hanging on.

[toyg]

I went through an acquisition myself and was told the same. In reality, nobody in our team ever got any opportunity that they wouldn’t otherwise have had. The main chances came from people resigning and leaving holes that someone else had to fill by working twice the load.

[gaius]

presents significant and unique opportunities to move vertically and/or horizontally to improve your situation

If you are better paid than the existing employees it's actually more likely that your salary will be frozen until it "harmonises" with them. You are also unlikely to have the contacts at the acquirer for an interesting lateral move, even if its permitted in the terms of the acquisition, I think the last time we were told there would be no internal transfers for the first two years.

[tonyedgecombe]

My experience was different, things changed within a couple of months although they were both relatively small companies.

The process was remarkably similar even though they were quite different businesses. Middle management was purged quite quickly, shortly after that all the value creators walked.

In both cases the purchaser ended up with a customer database and some residual support revenue. This may have been their expectation all along, I don't know how the figures looked.

I've read somewhere that most acquisitions don't deliver any value for the acquirer. This is why their share price usually falls on the news.

[gutnor]

> The interesting years are 2 and 3.

Indeed, after all what would be the point of going through the trouble of acquiring a company if major changes weren't coming ? If you don't need something special, there is a myriad of other option from simple client account to investment or the various partnership level, including shared owned subsidiary for R&D/other.

[kibwen]

Conversely, what would be the point of going through the trouble of acquiring a profitable company and trying to impose disruptive changes rather than sitting back and raking in the profits? AFAICT this is what Berkshire Hathaway does, and it seems to work out well for them.

(Though this isn't necessarily intended to deflate any fears about IBM meddling at Red Hat; for a company as important to OSS as they are, any change is worth being wary of.)

[Spooky23]

Berkshire Hathaway is a different animal, it's a value investing play -- they have access to cheap cash and need a home for it.

[hectormalot]

Eg look at the acquisition of Anheuser Busch by InBev.

AB was a profitable company, but InBev is just very good at efficiency in brewing. IIRC they paid handsomely above market price at the time and were able to translate their efficiency to AB in such a way that the combined reduction in cost and uptake in revenue creates value net/net for InBev (and therefore AB)

[kpil]

But what is IBM truly good at that can be applied at Redhat? A lethal legal department? Super efficient HR processes? Office supplies management?

I doubt something in engineering and sales? Or perhaps sales is the closest answer.

[awad]

Procuring large contracts from enterprise and government. It's pretty handy in business.

[canhascodez]

"Nobody ever got fired for buying IBM", is what they used to say. IBM has 100 years of brand-name recognition going for them. They have to be doing something right.

[TheRealDunkirk]

My big takeaway from the "merger" (read: takeover) of 2 Fortune 250's is: watch the management just under the C-levels. Their moves tell you everything you need to know about how it's REALLY going to shake out. If you see only one side of the house pulling the ripcords on their parachutes, well, you can't say you didn't see it coming.

[duxup]

I think it depends on where you are in the company.

For some areas change is immediate, others much slower.

[cakes]

and also what you work on.

I've been through it working on released and unreleased projects and how things are handled changes based on that

[cmrdporcupine]

Absolutely true. When the company I worked for was acquired by a BigCorp year 2 was when pretty much 80% of the original engineers left, despite fairly large golden handcuffs.