When your main competitor gets acquired
When your main competitor gets acquired you probably should be happy about it.
Instead of becoming a bigger threat your competitor is likely to become less threatening – at least for the first couple of years.
Executives – Management
If a company gets acquired the main objective of all CxO’s, VP’s, directors and managers of the company is not to increase or improve business, but to keep their job and position. Some might even hope getting a better position or more power.
For every CxO, VP, director and manager in the company there is at least one person having a similar function in the acquiring company. The battle of survival will start as soon as the acquisition negotiations start.
Internal politics and shifts of power will make executives and managers spending their time on internal matters.
Politics, perception, image and status become more important than achievements or business.
Wasting time and money
After an acquisition the two companies need to unify in products and solutions.
Time and money will be wasted in meetings, forecasts, budgets and reports on products or services, business plans and human resources.
Once the new visions and plans for the future have been agreed upon (if ever) and laid out, then this vision or message needs to be shared and explained to the employees of both companies.
Next the market with potential customers needs to be informed, educated or ‘brainwashed’ with marketing.
During all this wasting of time and money, the existing marketing spending of both companies will keep on being executed not having a unified or complete fitting message. The main change executed is the new logo or a mention of the acquiring company next to the brand name of the company.
Less business – more internal affairs
Thus instead of doing business, the newly emerged company will need to spend a lot of time and money on:
- Their internal affairs
- Their execs, managers and employees will waste efforts on politics
- Defining a plan for the future
- Laying off excess personnel
- Informing and motivating the employees
- Laying off (excess) employees
- Unifying the company cultures (or not)
- Building branding awareness the new company to the market and potential customers
In most cases these matters and issues will take a few years.
Window of opportunity
In case your main competitor gets acquired, you have a window of opportunity of a few years for expanding your market presence and market share, while your competitor is fighting internal struggles instead of doing business.
Your actions during this window of opportunity can be:
- Increase your marketing spending
- Hire salesmen from the company: promising them stability and income
- Sign-up their resellers or partners: stability, continuity of products and support
- Go after their customers: better service – better customer relation
After this window of opportunity time has elapsed, you need to be prepared for fierce competition.
However in some cases the new competitor starts to focus on another market segment: typically high-end as more operational or overhead costs need to be carried.
The best thing to happen is when the acquisition was a bridge to far: too complex, too different culture, too different products, too big, too different business, … your window of opportunity continues.
Is your competitor becoming an acquisition target?
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Fantastic insight into the difference between the external view (wow, they will be so strong with all that market share and economies of scale!) and the internal view (a lot of CYA and wasted efforts) of two merged companies.
One place these newly merged competitors will create confusion is at their trade shows, as they try to determine if they should 1. Drop one of their booths, or 2. Combine into a single, larger booths. They also will spend good money to rebrand their exhibits, perhaps one year with the two brands side by side, and then again with the remaining dominant brand the following year.