What You Need to Consider When Your Vendor Gets Acquired

A new corporate announcement of an intended acquisition: “reAlpha Tech Corp., a real estate technology company focused on developing, utilizing and commercializing real estate-focused artificial intelligence (‘AI’) to drive efficiency, sustainability and growth, announced today that it has signed a letter of intent (the ‘LOI’) to acquire United Software Group (‘USG’), an Ohio-based privately-held, multi-industry information technology (‘IT’) consulting company operating on a global scale (the “Acquisition”).”

Announcements like this — long sentences, sometimes illustrative, other times hefty servings of blarney — are common. The drive toward mergers and acquisitions, for companies to continue to gain mass like a Star Wars economic Jabba the Hut, happens apace and catches up customers of all sizes.

This is particularly true in technology as vendors are anxious to add more features, capabilities, and billable items. How else do you argue for regular price increases when the intrinsic costs of technology keep falling? CRE users can’t keep this from happening around their industry and individual businesses. But they can take steps to assess the implications. Here are some steps to take:

Do some market analysis. There may be third party expert takes you can find. Companies involved might have released information or addressed questions even if not public. To the degree you can, see how both were doing, including looking for customer reviews and complaints. Was the deal sound or did the acquiring company do some bottom feeding?

Tech companies can acquire others for different reasons. Sometimes an acquisition is an attempt to fill part of a function or product line without having to devote the time and resources to development. They might buy a competitor to put it out of business or a company to acquire one product without interest in others it has. That could mean losing access to software you’ve come to depend on.

If you’ve been dependent on the software of the acquired company, it makes sense to talk to the acquiring company for a sense of their plans on what might be retired or replaced. If you’re expected to shift over to new software, that should be your point to consider options. Don’t get needlessly trapped by inertia. Make decisions based on what is best for your company, not what is most convenient for a vendor.

If you have a contract, check that terms and pricing continue as you expect. Remember that a company can acquire another or instead buy its assets. See what your options and their responsibilities are.