A disruptive market creates the conditions for acquisitions. This has been happening with printers for years and print software vendors are experiencing the same conditions. As a customer of these products, you must understand the conditions of the acquisition in order to prepare for how it will impact you as a customer of the software.
As a printer in 2018, making software decisions is a strategic part of your business. As I’ve said many times before in this column and in industry speeches, the relationship between a printer and their software vendors is critical for success.
What happens when the software vendor you picked is now owned by someone else?
Acquisitions are very common across our industry; as print companies, we have been in a consolidating market for years. For the software companies that support this industry, there is a similar consolidation trend. It’s so important to look at the “why” behind software acquisitions so you can figure out how it’s going to impact you as a customer of the technology.
There are so many reasons why businesses decide to sell and many reasons why acquiring businesses decides to buy. Let’s review the common conditions that result in a print software acquisition. The first scenario is all about accelerated growth. A small to medium sized software company has grown to a certain size and simply can’t take themselves to the next level without an injection of capital, resources, access to new markets, or a combination of all three. When software acquisitions occur under these conditions, the result is typically more investment in the product, more investment in the team, more investment in scaling the company.
How does that relate back to you, the printer that bought this technology years ago, has been a loyal customer, and is simply looking to continue to get support? Let’s be honest: in the short term, there is certainly a distraction at the software company that was acquired—it is unavoidable. When ownership of a company changes, it impacts every single person who works for that company. This impact can be greatly reduced if the company prioritizes internal communication and gives the team a chance to openly ask questions and raise concerns.
The other critical factors in the merger are the cultural similarities or differences of the two companies. When a company acquires another company, their cultures must find a way to merge into a new culture. This depends on the conditions of the sale, the relative sizes of both companies, and whether the leaders remain in place. Cultural changes are difficult on a lot of people, especially long-term employees who have built a whole set of habits working at the same company under the same culture for years.
Generally, when a software company is acquired to accelerate its growth, it’s a long-term win for the printer who is licensing the software. You want there to be more people using the software because it strengthens the application. You may have to ride out the awkward transition time and you will have to live with a new culture at the software vendor, but it can be a net positive on your software investment.
Some software products and companies have run their course in their current state. Their software requires a major rework and the current ownership structure isn’t willing to make that large investment (essentially restart their business around a remade version of their software). When the acquiring company comes in, they are either going to make the investment in the software or buy the customer base with the hopes of transitioning them to different software. This is where your experience as a customer might be less than optimal.
Generally, you’re given a timeframe in which you can make the transition to a different solution. Depending on the complexity of the software this can be a major expense to you in time, resources, and licensing money. No printer wakes up on a Monday looking forward to committing lots of time, resources, and money on a software transition—this is just not something any business looks forward to.
Your ability to navigate this solution requires you to clear your head and your emotional attachment to the legacy solution and the sunk costs you have in it. The solution is going away; don’t make it worse by delaying it so long that you are forced to do it under duress. It’s kind of like going to the dentist: if you go right when you notice some pain, the experience is not as bad. When you wait and wait, you are in for a long visit that could be extremely painful.
Acquisitions are a part of our reality because disruption will continue in this market for the foreseeable future. When you look at the patterns of acquisitions and the conditions of software companies in this space, you can tell where the acquisitions might happen. Large companies buy innovation created by small companies. Print software owners want to retire just like printers do. Fast-moving software companies want to accelerate their market penetration. Those are the conditions that influence acquisitions—they are not hard to detect.