snatching defeat from the jaws of victory

The closing has been mishandled. For someone with this much M&A experience the mistakes are surprisingly rudimentary.

Quotes from FT:

“Never before has there been such uncertainty over the fate of such a large acquisition so close to a supposed deadline for it to be closing,” Kelly said.

“I’ve never seen anything like this,” said one hedge fund investor who owns VMware shares.

https://on.ft.com/46HbCOB

Management should have done all the necessary preparation, but not pulled the trigger until they had official confirmation from all necessary authorities. This is a mess. If the deal goes through, you have staff who no longer respect you, many of the team members initially excited about this are now negative. If it doesn’t, you have a company that’s deeply damaged. Staff who know they were viewed as dead weight by their management.

Given that EMC was acquired through PE - I suspect the fund needs to wind down (typical 10 year fund cycles), so if the deal doesn’t go through they’ll be shopping for another buyer or exit the stock. The acquisition was in 2016, so they have max 2 years to liquidate.

It’s a very unfortunate situation. Everything was going well until the last week. So much value will be destroyed if the deal doesn’t close.

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"I'm no fan of HT and certainly not the VMW executive goons, but it is naive to say that they should have been prepared for the current roadblock"

Former VMware CEO, current Intel CEO didn't make such a mess of the Tower Semiconductor purchase. You simply don't proceed until you have everything in order. Our access to VMware systems was cutoff last week, without approval. We are a week into "soon" and we still don't know anything. VMware had been patiently waiting for the last 16 months, running as usual. There was no rational reason to jump the g-n and cause so much pain.

True! Lots of jobs for sure! For engineers.
Managers an up - not so much especially since such a mess up with them on this company.

“ That means plenty of people who VMW actually needs in order to keep functioning are going to bail as soon as the opportunity arises. “

Yep I’m bailing. Signed an offer last week with higher comp. For those saying job market su-ks, it’s not true. There are a lot more openings than when I first started looking 3 months ago. Network network network but also explore options outside of your network and industry. There will be more openings beginning of next year but it’s always better to start sooner. The early bird catches the worm.

Don’t work for either company. Have been in a lot of deals over the years. Sometimes they fail, but I’ve never seen one fail the same day as it was supposed to close where management loudly proclaimed it was a done deal, up to the moment they announced the fail.

The “held hostage” situation of shareholder stock is getting more prominent as each day passes. That is a very expensive situation for those shareholders.

I'm no fan of HT and certainly not the VMW executive goons, but it is naive to say that they should have been prepared for the current roadblock. Per some pretty high-level US .gov sources that I follow, Xi has almost completely isolated himself from the input of all other Chinese government leaders, and is making many decisions in an almost total vacuum of information. His staff is mortally afraid to tell him anything because he has shot the messenger so many times. So there is now an environment where the Chicomm bureaucrats are operating in absolute chaos. Therefore it is no surprise that this deal is in a limbo that could not have been predicted, as I am sure many other Gyna-related developments are.

“I’ve never seen anything like this,”

We have been saying this a lot recently with many things since the thing happened in 2019.

The world has changed. Ray Dalio has some theories. The globalization narrative is breaking down. So more conflict rather than mutual prosperity.

Agree. No exit for PE firms. No IPO. Withdrawal suspended. Desperation. Sell your best assets first and wait for the conditions to improve? The chaos has just started. Interest rates Higher forever.

" So much value will be destroyed if the deal doesn’t close. "

Yeah, unfortunately, so much value will be destroyed either way at this point.

If BC closes the acquisition, there are going to be a lot of disaffected people working for Hock, who's proven his ineptitude and lack of concern. As a business leader, you don't have to pretend to love your employees, but you need to at least give the appearance that you don't actually hate them. That means plenty of people who VMW actually needs in order to keep functioning are going to bail as soon as the opportunity arises. Those who remain will be demoralized. Institutional knowledge, which in the case of a software company is an deep understanding of the code base, will be lost. The uncertainty and chaos will take years to settle out.

If the transaction fails, VMW will be full of disaffected employees following "leaders" who've proven themselves to be incompetent. Many people who were told they were being eliminated will do the bare minimum of work. The future of the company will be uncertain to employees and customers. The most likely outcome here is that layoff happen anyway and the company sails on like the flying Dutchman until MD dismembers it and sells the bloody pieces to PE.

This whole thing is a textbook lesson in how not to run an M&A.

Qualcomm was different though. It failed because at the time Broadcom as not "American" and Trump stopped a foreign company from buying a large, important company like Qualcomm.

However, since then HT has found an American headquarter for BC, so he is trying again. This time with VMware.

HT failed before with Qualcomm. Sometimes even the best can take multiple Ls

This is sadly not surprising at all. There is a cult of Hock that believes he can do anything and VMware is a seriously dysfunctional and lost company.

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snatching defeat from the jaws of victory

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