The long, drawn-out saga of the attempted takeover of iSoft by IBA — which looks set to finally reach its conclusion now that iSoft’s directors have recommended that shareholders accept IBA’s latest offer — brings back memories of an earlier software company takeover: Oracle’s 18-month bid for PeopleSoft.
While the IBA-iSoft situation is different, as it’s not a hostile takeover, it’s similar in that it has turned out to be a complicated, messy affair that must have generated lots of billable hours for the lawyers and other professionals advising the companies concerned.
IBA-iSoft is also different insofar as it involves two companies that are smaller and more specialised than Oracle and PeopleSoft; but the situation is similar because in both cases, customers and employees of the companies endured a period of considerable uncertainty.
The uncertainty that mergers and acquisitons generate shouldn’t be underestimated, and its effect on staff and users should be foremost in the minds of those doing the negotiating and bidding during such events. When the transaction turns out not to be straightforward, as was the case with IBA-iSoft and Oracle-PeopleSoft, the need for those handling it to bear in mind the situation of users and staff is even greater.
One former PeopleSoft Australia staffer, speaking to Computerworld earlier this year, said the experience of waiting for 18 months as Oracle’s takeover bid dragged on was like having toothache — you wake up every morning, you’ve got toothache, but you just put up with it and get on with things, was how he described it.
His experience as a software company employee going through a takeover process may have been worse than most, but as someone working in the field, he would have known that he could have been bought or sold any time, because in the ICT industry, mergers and acquisitions are a dime a dozen.
Indeed, there’s hardly a day when the international news services and technology websites don’t carry news of a takeover of one kind or another, be it a merger between two big players, a big player buying a small and innovative start-up, or, as has become increasingly common in the past couple of years, a private equity firm loading itself up with debt and buying a software or telecomms company. (As I was writing this last week, news came through that Oracle had acquired Netsure, a provider of network intelligence and analytics software).
M&A activity is the lifeblood of the industry and most of the biggest companies in it have become the size they are largely due to acquisitions. Without the constant process of renewal and rebirth via M&A, the industry wouldn’t be as dynamic as it is.
Therefore, most employees and end-users in the sector accept that they’ll probably be part of an acquisition at least once during their career, and when it happens, they’ll go through the process with good cheer.
But that good cheer is dependent on being kept informed about the acquisition process while it’s happening and by the perception that the companies involved — and the regulatory authorities that oversee M&A activity — are doing everything they can to make the process as fast and smooth as possible.