Mergers and Acquisitions - IBM

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Mergers and Acquisitions

Abstract

Mergers and acquisitions refer to the features of corporate finance, strategic management, as well as management. These features deal with the buying, the selling, and dividing of many companies. The division helps the enterprise to grow faster without the need to create a subsidiary of a joint venture. The paper shows an example of one company that went through the process of mergers and acquisition in the United States of America for the last three years.

Keywords: Strategic management, corporate, subsidiary, joint venture

IBM Acquisition of Cloudant

IBM continued to stamp its control in the cloud-computing world when it announced that it was about to make an acquisition of Cloudant, a company that provides customers with a database-as- a service. Through its annual conference, IBM declared that the agreement to make an acquisition of Cloudant, a Boston-based company, was complete. Cloudant, a privately owned company that helps developers to build a web and mobile apps, had chosen to become a part of IBM’s family (Goldberg, 2013, p. 134).

Circumstances that Led to Cloudant Acquisition

IBM believed that by reaching an agreement to acquire Cloudant, it would extend its cloud computing space, big data and analytics, and mobile services through the act of helping their clients to take advantage of the growth opportunities brought by the acquisition. Since many customers from across all industries that include financial services, online learning, financial services, healthcare, and retail use Cloudant computing, IBM saw this as a chance to build its economic empire and increase the market potential. According to Poulley Sean, the deputy president of Database and Data Warehousing at IBM, IBM has taken the forefront in trying to help its client in taking advantage of the big data, mobile, and the cloud. On the other hand, Cloudant sits at the centre of the transformational areas and assists the clients in delivering innovative, data-rich, and engaging apps to the market (Goldberg, 2013, p. 135).

Cloudant Company had also risen to become a major contributor in Apache CouchDB, an open-source database community. The database offers elastic scalability, high availability, and innovative mobile synchronization. JSON cloud-based service enables web and mobile developers to store and get access to an explosion of flexible data. Most importantly, NoSQL databases are flexible and this has led to many developers embracing it. Therefore, its usage for both web and mobile app developers has made JSON as the leading NoSQL database technology. Robert Leblanc, senior vice president of cloud solutions and software, believes that JSON is the first NoSQL database ready for use in the enterprise (Goldberg, 2013, p. 135).

Reasons for the Acquisition

The decision to acquire Cloudant was IBM’s belief that the acquisition would help complement its big data and analytics portfolio that would surpass the conventional data management. The acquisition would achieve this fete through the provision of a database that acts as a service and assists clients in simplifying and accelerating the creation of appealing and ascendable web and mobile apps. IBM also believed that the acquisition of Cloudant would also form an integral part in IBM’s Mobile First solutions. The acquisition would help the developers using IBM’s mobile app development software, and the Worklight to create adjustable and ascendable apps that fuse both structured and non-structured data (Goldberg, 2013, p. 136).

IBM also believed that the acquisition of Cloudant would help in strengthening its cloud solutions through provision of tools and resources to its developers. These developers would build, conduct some tests, deploy, and scale the cloud apps in many hosting layers.

Positive Effects

One of the positive results that came about because of Cloudant acquisition is that today the Cloudant runs the whole of IBM’s software platform. Cloudant also extends the recent investments made by IBM in its software cloud infrastructure. As an international service that brings in revenues from over 140 countries, the Softlayer gives an easy cloud to support the potential clients in deploying flexible potentialities with the privacy, security, the accuracy of discreet clouds and the economy, adjustability and the speed. Derek Schoettle, Cloudant CEO, believes that Cloudant’s decision to be a part of IBM family shows that the subsequent wave towards the enterprise technology innovation is moving away from the infrastructure and it now appears in the data layer. He further believes that the Cloudant’s relationship with Softlayer and IBM had grown mostly in the present days due to more devices that generate data at an extra-ordinary rate. Combination of IBM’s resources and enterprise reliability with the expertise of Cloudant NoSQL brings an addition to data layer services to the overall IBM’s portfolio that competes with that of others (Goldberg, 2013, p. 136).

Negative Effects

A notable effect of the merging of big data and cloud solutions is that only well established enterprises with the largest capital outlay are able to create these big data cloud offerings. The acquisition of Cloudant by IBM paves way for the Walmart technological results, a situation whereby well-established sellers are in a position to create mats of divergent data that will threaten the vitality of the big data, the cloud, and the analytic start-ups. For example, the big retailers, such as Walmart threatens the vitality of many self-reliant stores.

Organizational Structure after the Merger

The acquisition of Cloudant came about because IBM wanted to strengthen its portfolio to assume a leadership role in the cloud computing technology. The acquisition came about after the company announced that its objective was to invest billions of dollars in building a domain business, establishing an independent business unit, and acquiring of the Softlayer that will help the company in cognitive and cloud computing. IBM Company also reiterated its stance of putting Cloudant Company under the Information and Analytics Group, which is a newly formed business unit. With this, the IBM Company assumed a divisional organizational structure after making the acquisition of Cloudant. The acquisition also led to a complex organizational structure because of the additional portfolios (Goldberg, 2013, p. 143).

Initially, the organizational structures of the two companies before the acquisition was simple and vertical, but after the acquisition the organizational structure of the new company looks complex. The consequence of this may mean that coordination and communication between the different units that make up the company will start to experience some problems.

Modification of the Human Resources management practices in the Company after the Acquisition

There was no major modification after the acquisition of Cloudant Company by IBM. The reason for this is that the Cloudant Company may have had an effective human resource policy in place before IBM developed an interest in acquiring it. The innovative products that the company developed show the level of competence of all the employees hired by the company. These employees also had all the necessary skills to work for this esteemed company. Therefore, the company built its human resources policy on sound management principles.

References

Goldberg, R. A. (2013). Mergers and acquisitions 2013: trends and developments. New York, NY: Practicing Law Institute.

Mergers and acquisitions. (2005). Mechanicsburg, Pa.] (5080 Ritter Rd., Mechanicsburg 17055- 6903): Pennsylvania Bar Institute.

(2000). Mergers and Acquisitions. Biotechnology Law Report. 19(5), 614-615.

Vachon, D. (2007). Mergers and acquisitions. New York: Riverhead Books.

Vinten, G. (1993). Employee Relations in Mergers and Acquisitions. Employee Relations. 15(4), 47-64.

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