Most of you have heard by now that, a few weeks ago, Dell (currently a private company) announced an agreement with EMC (a publicly traded company) to acquire EMC for some cash and shares of VMware.
While there have always been acquisitions, mergers, privations of companies, this is clearly one of the biggest—if not the biggest—in recent memory. So what does it mean for users of either company’s products?
Well, what we know today is that if the deal goes through, Dell will pay EMC shareholders cash and shares of VMware stock in exchange for their EMC shares. This is interesting as EMC has long held a controlling interest in VMware, and many activist investors have said there is more value in separating EMC from VMware completely. This will accomplish that, and it will provide EMC shareholders with a very good return.
We also know that as part of this deal, EMC has 60 days to seek other suitors for their company. While this may seem strange, the board of EMC has a fiduciary responsibility to get the most for their shareholders, and this allows them time to do this—to see if someone else wants to pay more. Once the 60 days has passed, assuming there are no competing offers, it is anticipated that this deal will close middle to 3rd quarter next year.
So what does this mean for those currently buying EMC and Dell products? In the short run, probably nothing will change. It will be business as usual until the buyer is finalized and the deal is done.
We can look to history to help us determine what may happen in the future. While some rationalization of product lines will likely occur as both have storage products, backup solutions, etc., history reveals that when this type of deal occurs, support for current products will continue for a period of time. So clients can usually rest easy in the near term. As the rationalization occurs, clients may need to move to surviving product lines.
History also tells us that, in this types of acquisition, there will likely be a resizing of sales forces. There is overlap today and this may result in a reduction of redundant positions. It is often one of the drivers for cost savings that help pay for this type of deal. Some will say, “great, fewer sales people to deal with,” but, it will also mean less competition—which is always one way manufacturers keep each other honest on pricing.
What would I expect? First the deal will probably go through as there are only a few other companies that might be interested in acquiring EMC. In the short run, not much will change. By late next year, Id expect a change in structure of the combined sales forces for the new Dell/EMC company. This means changes in who you deal with as a client of either company. We should start to see announcements in 2017 about product lineups.
While many of you will worry about what will happen, we can help. It is often the reason people want to work with companies like ours. We know what ‘best pricing’ is, and regardless of which manufacturers merge, what they say or do, we can and do help make sure our clients always get the best solutions and the best price.
If you’re seriously worried about the current solutions you buy thru Dell or EMC, let us help you review to ensure you have the right solutions for today and for your future needs.