1 The first thing to know? Don’t panic. According to Mike Bollinger, VP, Global Thought Leadership and Advisory Services at Cornerstone, an acquisition isn’t always bad news. “If your existing vendor is a small company, the acquisition may give your vendor—and you—additional capabilities. And if the acquiring company is seeking to broaden their customer base, they may be planning to invest in and improve your existing product.” However, Bollinger also cautions that as an existing customer, an acquisition may put your product line—and your organization—at risk, especially if your product is similar to an existing offering. “The architecture might change, the integrations might change, your service level agreements might change, the people that you're going to work with might change. The product might be phased out. The big question is, how will these changes be managed and how will they affect your organization?” Is there a way to see into the future, to predict if your product is at risk? While it may be months or years before you have a definitive answer from the acquiring company, Bollinger says that there are several indicators that your product may eventually be on life support. “If the acquiring vendor has a competing product line or if they use a different technology platform, that tells me that your product may be at risk. For example, if you’re on microsoft. net and the acquiring company uses JAVA. If you’re not part of their stated target market, that’s another indicator. And sometimes, your product is in trouble if your vendor is pushing you to renew early, although there can be several other reasons for early renewal.” My vendor is being acquired. What are my options? You’ve just found out the rumors are true: After spending months—or years—finding, vetting, and implementing the right talent management platform, your vendor is being acquired. The most common reason for an acquisition? The acquiring company wants to expand its market share. Though costly, it’s still often less resource and labor intensive to acquire a company—and that company’s customer base—than it is to develop a new product and find new customers.
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The first thing to know? Don’t panic. According to Mike Bollinger, VP, Global Thought Leadership and Advisory Services at Cornerstone, an acquisition isn’t always bad news. “If your existing vendor is a small company, the acquisition may give your vendor—and you—additional capabilities. And if the acquiring company is seeking to broaden their customer base, they may be planning to invest in and improve your existing product.”
However, Bollinger also cautions that as an existing customer, an acquisition may put your product line—and your organization—at risk, especially if your product is similar to an existing offering. “The architecture might change, the integrations might change, your service level agreements might change, the people that you're going to work with might change. The product might be phased out.
The big question is, how will these changes be managed and how will they affect your organization?”
Is there a way to see into the future, to predict if your product is at risk? While it may be months or years before you have a definitive answer from the acquiring company, Bollinger says that there are several indicators that your product may eventually be on life support. “If the acquiring vendor has a competing product line or if they use a different technology platform, that tells me that your product may be at risk. For example, if you’re on microsoft.net and the acquiring company uses JAVA. If you’re not part of their stated target market, that’s another indicator. And sometimes, your product is in trouble if your vendor is pushing you to renew early, although there can be several other reasons for early renewal.”
My vendor is being acquired. What are my options? You’ve just found out the rumors are true: After spending months—or years—finding, vetting, and implementing the right talent management platform, your vendor is being acquired.
The most common reason for an acquisition? The acquiring company wants to expand its market share. Though costly, it’s still often less resource and labor intensive to acquire a company—and that company’s customer base—than it is to develop a new product and find new customers.
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What’s in your contract? The good news? The acquiring company must honor your existing contract with your current vendor. The bad? The acquiring company only has to honor what’s written in that contract. It seems obvious, and yet your previous vendor may have given you additional services or perks that weren’t in your contract.
As the acquiring company is only required to deliver on what’s written, review your contract carefully. Pay attention to language to identify your service level and understand exactly what that includes—and what it doesn’t. Ask the following:
• Will service levels change?
• What about performance outcomes?
• Will your customizations/configurations still be supported?
Do your research. If any of those indicators are familiar, Bollinger recommends you start planning now. How? “Find out as much as you can about the transition. Do some research. Be persistent. Ask questions. And realize that, as a customer, you do have some leverage, as well as options.”
Here are some starting points for your research and key questions to consider:
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Who will be supporting the product? What is going to happen to the people who have supported your product, i.e., your service contacts? Are they staying? If the acquiring company lays off staff (usually to cut costs), who will support your product during and after the transition?
• Whom should you contact if you need help with the product?
• What kind of support is available—phone, email, etc.—and what’s the expected response time?
• Will the support process be different?
• Can you contact your new support team—and receive help—24/7, and if so, will it cost more?
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What’s the roadmap?You likely spent a long time vetting your previous vendor, including asking about the future of the product. Maybe your decision to implement your current product was partially based on having access to future features. With an acquisition, that roadmap may change, and features you planned on having may never materialize.
• Does the acquiring company intend to honor the existing roadmap?
• Is there a new roadmap?
• Are planned-for features still in development or are they at risk?
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Will integrations stay the same? It’s rare that a product is a true standalone. Integrations—with third-party providers, multiple HRIS systems, selected partners—are key to streamlining and automating many of your HCM processes. Your talent management platform likely connects to software used in other parts of your business.
• Will the new vendor honor these integrations?
• Will integrations cost more?
• And what happens if these integrations are discontinued?
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Are other customers happy? The acquiring company’s customers can help you learn more about the company’s process, follow-through, and integrity. Bollinger recommends going to the acquiring company’s user conferences. “Talk with their existing customers. What do they like about the company? What are some problem areas? Find out all you can about how they do business.”
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Not optimistic? Have an exit strategy. What if you’ve done all your research and you’re not optimistic about the transition? “There may come a point where you’re not happy, where the people you have relationships with have disappeared, where the service level agreements aren’t acceptable, where there’s a new management structure. The acquiring company may even be pushing you to move to a different product,” says Bollinger. “This is when you need to start thinking about an exit strategy.”
The most critical part of that strategy? Accessing and moving your data. “How do you get your data? What are you going to do with it? Most contracts don't give you a lot of time to get your data out, so you really have to plan for that early on,” says Bollinger. His recommendation? “Ensure ahead of time that you can access and create data extracts. Evaluate those extracts to see if you will be required to do data conversions. If so, make sure you have the source of the system coding and test how far back can you get data consistent with your own retention policies. And, finally, be aware that this will vary by data set.”
“ Most contracts don't give you a lot of time to get your data out, so you really have to plan for that early on.”
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Cornerstone is the global talent management software provider that is pioneering solutions to help organizations realize the potential of the modern workforce. csod.com
Three things to remember: Ask questions of both your vendor and the acquiring company. Read your master service agreement. Read your contract. And ask questions. What are the non-performance outcomes? What are the integration agreements? How long does the contract last? Whom will you contact for service?
Consider the pros and cons of renewing early. Even before the acquisition is formalized, your vendor may offer you a deal if you renew early. There are several reasons for this. One, the vendor and rep are trying to make sure that they are compensated when the acquisition occurs. Two, your vendor may be under pressure to “look good” from a cashflow perspective. And third, the acquiring company will want as many contracts locked in as possible before the transition date.
That said, renewing your contract early isn’t always bad. It may be to your benefit to take advantage of the lower cost for the subscription. However, Bollinger recommends not entering into any long-term contracts unless you intend to stay with the new company for some time.
Be wary of cross-selling. Early on, the acquiring company may try to sell you their other products, especially if the acquisition’s purpose was to increase customer base. This is known as cross-selling, and it’s a way acquiring companies can generate extra revenue during and after the acquisition. Take your time considering if you really need these additional products.
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