Interesting comments from BeyondVC and A VC about how to react when one's competitor is acquired.
Stand Up and Cheer. Loudly.
Usually when a competitor is bought at a huge price the first reaction is why it wasn't me. The second reaction usually becomes fear as you begin to worry about what your competitor's product will do in terms of market share with a huge sales force and partner channel, strong brand name, and global infrastructure to support the customer growth.
But, he says:
First of all, the majority of acquisitions fail. Secondly, your competitor will be inwardly focused and quite distracted for the first 6 months trying to integrate with the parent company. Finally, depending on how the acquisition was completed, employees will begin to leave as soon as they get the bulk of their money off of (sic) the table.
Last year, for example, one of my companies was able to build an incredible sales team overnight [when a competitor was acquired], saving us six months of hiring and giving us an opportunity to hit the market harder and faster.
Must discuss this with my M&A classmates!