M&As: The Human Factor

Posted: July 28th, 2010 | Author: Olivier Suard | Filed under: Telecom Trends | Tags: , , , , | 2 Comments »

In a recent blog post, Comptel’s CEO Sami Erviö reminded us of the fact that Comptel has been in business almost a quarter of a century, and asked: how many [OSS/BSS] companies have come and gone in that time?

This got me thinking. One of the main reasons companies “disappear” in our market is mergers and acquisitions (M&As). Over the years, we have seen waves of acquisitions, especially in the hot areas at the time. We had the billing acquisitions (Kenan, LHS, Geneva, Kenan again, Portal, LHS again), and then the fulfillment acquisitions (Metasolv, Granite, Cramer, Axiom Systems, Syndesis). It wouldn’t surprise me if we soon saw a new wave of M&As in the latest hot area, policy control.

Acquisitions are notoriously complex operations, but one of the trickiest aspects is the “human factor”. In a knowledge industry like ours, if the employees of an acquired company walk, then that company loses what made it special, including drive, skills, knowledge, innovation, and relationships with customers and partners. This is bad news for the acquiring company, but also for customers of the acquired company—after all, this is what they bought into.

One thing that astonished me when Comptel bought the company I was working for (Incatel) in 2005 was that, unlike any previous acquiring company I had seen, they didn’t march in as conquerors. Having been on the receiving end of acquisitions in my past career, I had grown used to the acquiring company assuming an air of superiority that did not make me (or many of my colleagues) feel welcome, despite the fine words. Indeed, within a year, many of us had “walked”.

In contrast, Comptel seemed intent on preserving what was special about the acquired company—especially its people.

As the marketing director for Incatel, I was somewhat sceptical (after all, we all know marketing is typically one of those “cost synergies” targets) but chose to believe. And lo and behold, within a year, I was marketing director for Comptel. I am pretty sure that a marketing director of an acquired company taking over the role in an acquiring company is virtually unheard of in the software industry. In fact, it is quite a tribute to Comptel’s attitude in M&As that the former CEOs of the two companies Comptel acquired in recent years, Axiom Systems’ Gareth Senior and Incatel’s Arnhild Schia, are still with the company, two and five years later respectively. This is, I believe, quite exceptional in our industry—most “acquired” CEOs seem to leave within a matter of months after the acquisition.

Of course, no OSS/BSS software company is immune to becoming a take-over target, but clearly for smaller, often one-product companies, being acquired is something of a raison-d’être—hence the often disproportionately high marketing spend amongst these companies. The OSS/BSS community is now rife with M&A rumours—many probably unfounded but certainly credible. The coming few months should be interesting…

Oh, and by the way, in case that wasn’t already obvious, this blog item should in no way be seen as an indication of any M&A intent by Comptel!

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