When Your Favorite Software Vendor Gets Acquired: The Risk of a Souring Relationship

As the RVP of Sales at Flexera, I've seen firsthand the complex dynamics of the software industry. One scenario that always raises a red flag is the acquisition of a trusted software vendor. While acquisitions are common in the business world, they can carry significant risks for customers, particularly when the acquiring company has a history of aggressive business practices.

A prime example is Broadcom's acquisition of VMware. The acquisition was met with widespread concern in the industry, with many customers worried about potential price increases and changes to product roadmaps. Unfortunately, these concerns were validated, with Broadcom quickly implementing significant changes, including substantial price hikes and the elimination of popular features. ?

As one VMware customer said in a recent interview, "We've gone from having a partner we trusted to having a vendor that seems more interested in extracting value than providing value." This sentiment is echoed by many other customers who feel forced to adopt changes they don't want or need.

So, what can you do to protect yourself from the potential fallout of a software vendor acquisition? The best defense is a good offense. Here are a few tips:

1. Put Protections in Writing: When negotiating contracts with software vendors, include language that protects you from significant price increases and unilateral changes to product features or support levels.
2. Know Your Rights: Familiarize yourself with your contract terms and understand what recourse you have if the vendor violates them.
3. Explore Alternative Options: Don't put all your eggs in one basket. Having alternative solutions in mind can give you leverage in negotiations and help you transition smoothly if needed.
4. Don't Overinvest with Any One Vendor: Avoid becoming overly reliant on any single vendor. Spreading your investments across multiple vendors can mitigate risk and ensure business continuity.

While the Broadcom-VMware acquisition is a cautionary tale, it's important to remember that not all acquisitions are bad. Many acquisitions result in positive outcomes for customers, such as improved products and expanded capabilities. However, it's always wise to be prepared for the potential risks and take proactive steps to protect your interests.

Remember, knowledge is power. By staying informed about industry trends and understanding your rights as a customer, you can confidently navigate the ever-changing software landscape and ensure your business's continued success.