Broadcom’s recently completed $61bn acquisition of cloud computing company VMware is not officially out of the woods, according to a recent industry update blog by GlobalData analyst Steven Schuchart.
Despite the deal closing on 23 November, Schuchart writes that acquisitions rely just as much on humans as they do on money. A badly handled acquisition, he writes, can destroy a company’s culture and methods.
Schuchart reflected on two previous acquisitions made by Broadcom: CA Technology and Symantec.
Broadcom’s treatment of both generated worry from industry watchers and customers alike. Both CA Technology and Symantec experienced layoffs and restructuring after Broadcom’s acquisition.
Hock Tan, Broadcom’s CEO, reassured customers and industry insiders that this acquisition of VMware would be handled differently.
“So far, it seems that hope was misplaced,” writes Schuchart, “VMware lost both its CEO and President… The layoffs have also started, with a reported 2,800+ jobs cut across the company, expected to occur at the end of January 2024.”
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Human factors, stated Schuchart, cannot be ignored in acquisitions.
Broadcom’s decision to restructure VMware’s employees and its revamping of the company into different factions has led industry watchers to question whether VMware really is VMware anymore.
Instead, Schuchart writes that when it comes to big company acquisitions sometimes the correct plan of action is to leave them alone.
“This is done to retain talent, ensure stability, and to preserve the culture and people that made that company successful,” he writes, “These acquisitions are done with the aim of not killing the golden goose, and making it happy and thrive.”
Schuchart also reaffirmed that successful companies, such as VMware, expect better treatment.
An abduction of its headquarters and an uncertain and uncommunicated restructuring may kill the very success that Broadcom wanted to acquire.
By 2026, GlobalData forecast that global enterprise spending on the cloud will reach more than $700bn, achieving a compound annual growth rate of 16% between 2021 and 2026.