When one company buys out another, it gives the smaller company a chance to survive. People get to keep their jobs, customers get to keep using the product.
But there are also losers. Dilbert's Law of Mergers calls for 15% to always be laid off.
Plus, there is the negative-hiring effect. (When a new business opens, economists guestimate that 2.5x more jobs are created from the added flow of $$ in the area.) There must be a similar ratio for job and $$$ losses from mergers. Here's a couple of examples:
-- magazines and other publications have one less advertiser to derive revenue from.
-- external pr firms lose a client.
-- other outsourced services, such as CD production and accounting, may lose a valued customer.
Overall, are acquisitions good or bad for the industry that surrounds the CAD business?
For verification of your facts, could please indicate source of statement "Dilbert's Law of Mergers"
(As I am employed in firm that has just 'merged')
Jim L
Posted by: Jim Longley | Nov 07, 2007 at 07:21 AM
It has been my observation that the 15% rule is probably about right, but it is usually the wrong people who worry about it.
When two companies merge to form a bigger company the resultant company still needs about the same number of lower-level people to do the work, but they don't need two presidents, two CEO's, two sets of VP's, and so on.
It's the ones at the top who have most to fear, not the ones at the bottom.
Posted by: Bill Fane | Nov 12, 2007 at 11:01 PM
The CAD/PLM industry needs to consolidate and will consolidate. There are strong technological and business pressures behind this consolidation.
Those of us who are part of the industry should remember the founding idea behind The CAD Society: the company on our business card changes from time to time, but we are still part of the industry.
Posted by: Randall Newton | Nov 13, 2007 at 01:50 PM