Monday, October 20, 2014

Semiconductor Acquisistion - Mergers - Takeover and Impacts


Dear Readers,

Mergers and acquisition are common in today’s global market. If you take a history of any successful big companies in the market for more than 10-15 year, you would see the list of companies they acquired. So now two questions comes in mind. "Companies does acquisitions and become successful in the market? Or Successful companies does acquisition to be in market with profitable approach YoY?". There could be a different answers to these question depending upon various factors. I would be pleased to hear answers/views on these questions. Lets share views and experience.

Let’s assume that acquisition is part and process for successful companies and try to understand what impact does it make on different segments.

These days you might be observing industries’ various deals in terms of either merger, acquisition or takeover with all sets of new brand names. It is a way for companies to acquire technology, products and man power to improve profit and stock price while reducing overall expenses. In last few months, I have heard about many small to big acquisition in 2014. Some of them are given below in table and many more could be in the pipeline or in process.

Some of the recent acquisitions-mergers happened in 2014-15:

Avago
LSI - Broadcom
Inphi
Cortina
Infineon
International Rectifier
Seagate
LSI’s Flash business unit
ON Semiconductor
Aptina Imaging
Qualcomm
Wilocity, Black Sand Tech, HP Patents and CSR plc
Synopsys
Coverity


Impacts:
Lets understand what are the segments where mergers/acquisition could make an impact. There are two major segments where we could see the small to major impact because of acquisition and mergers.

1.       Service/consulting/Contract/Freelance
2.       Employees

Service/consulting/Contract/Freelance:

Service segments who mostly relies on the product based companies for business revenue may face a challenge to gain business. During the merger/acquisition time most of the companies holds/stops their decisions for outsourcing their work to service companies. There are strong reason behind holding these decisions as they expect man power, technology and product acquisition as a part of merger/acquisition deal. So management has to think and restructure all sets of resources to make sure effective and profitable utilization model in place. Only after concluding this model they can either release, postpone, cancel their decision on outsource/contract the work. This could eventually effects service business revenue, consulting and contracting opportunities for freelancers. Would be happy to hear from experts on their views on real impact on service business !

Employees:

During the merger acquisition process there are mostly/at-least two group of employees evolved, coming from the organization with different culture. In this transition phase, most of the employees faces challenges, especially on uncertain future, career. They would also be in phase where they think whose job is on critical edge ! This time frame is critical for employees as they need to make sure they are synced with other culture, people, style and way of work along with their individual performance !  Change is always difficult for employees especially they are not engaged in decision that impact their jobs and career. This could lead to a stress for individual and can impact on personal growth.

I had a talk with couple employees who were in same situation and got a smell that employees in this situation may fear losing their jobs or losing opportunities they had. These type of fear can negatively impact on productivity and eventually companies growth engine if continues. One more important point that I realize is “conflict with competitiveness”. When employees are in fear of losing jobs they are more likely to become competitive with others in the same path and eventually can end up having conflict. Competition is good if it is not creating violence !! J These could be major factors where employees gets affected during merger / acquisitions and would be happy to hear views experience from industry experts.

Thanks,
ASIC With Ankit

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