IBM Mergers & Acquisitions - A critical analysis of the problems Essay

IBM Mergers & Acquisitions - A critical analysis of the problems occurred by major acquisitions - Essay Example Although commonly misinterpreted as one, merger and acquisition are two different business strategies in the sense that merger is the process of combining two or more business organizations which often occurs through the purchase acquisition of another business entity (InvestorWords 2011a) whereas acquisition is referring to the act of gaining control over a company by purchasing its stocks as a way of gaining the legal rights to take-over the business (InvestorWords 2011b; Hill and Hill 2005). As explained by Massoudi (2006, p. 19), it is important for IBM Tivoli to learn more about the market potential and profitability of acquiring another company like the BigFix by carefully examining the value of its IT technology and expertise IBM Tivoli could gain out of purchasing another company. As a strategy to improve IBM Tivoli’s security-related field, IBM has been continuously acquiring other IT companies that specializes in the development of IT security software. As IBM Tivoli ’s 11th acquired producers of security-related software, the company made its final decision to formalize its acquisition of the BigFix Inc. for the price of US$400 million (?263 million) back on the 1st of July 2010 (Diaz 2010; Hoffmann and Saitto 2010; IBM 2010; Rogers 2010). Founded back in 1997, the BigFix Inc. is a US-based company that specializes in the reduction of cost and complexity when managing network servers, personal computers and mobile system (Haikes 2011). In line with this, Amrit Williams – BigFix’s CTO stated that â€Å"BigFix is a leading global provider of high-performance system and security management software designed for the special needs of enterprise companies and that BigFix’s unified management platform provides the users with real-time visibility and control through the use of a single infrastructure, single agent, and single console for systems life cycle management, endpoint protection, security configuration, and vulnera bility management† (Winman 2010). Using relevant merger and acquisition theories, this report will identify and critically analyze the merger and acquisition problems that occurred when IBM Tivoli decided to acquire BigFix Inc. To give the readers a better idea about this research topic, this report will discuss the significance of merger and acquisition towards the business success of IBM Tivoli followed by discussing the common internal and external factors that may lead to merger and acquisition failure. Based on the actual business experiences of IBM Tivoli after acquiring the BigFix Inc., this report will evaluate whether or not the act of acquiring the BigFix Inc. has been a good business decision or not. Significance of Merger and Acquisition towards the Business Success of IBM Tivoli’s Decision to Acquire BigFix Inc. In general, the main purpose of entering into merger and acquisition is not limited to the need to increase IBM Tivoli’s market shares but a lso in terms of obtaining critical mass, expanding its geographic business coverage, increase the quality and widens the scope of IBM Tivoli’s IT-products and services, improve the company’s existing competitive advantages and improve its existing diversified portfolio (IBM 2011b). Applicable to desktops, servers, and laptops, Diaz (2010) reported that IBM Tivoli’s decision to acquire BigFix will enable IBM Tivoli offer BigFix’