Consolidation has been the topic at our SP Summit and that of various other events in the industry in recent times. There are those who believe that this is the best way to grow and some who are wary about this trend. And with good reasons.

After all, the stock markets were in their worst phases. Customer sentiments were guarded. Most companies had revised their targets for the year, scaling it downwards. And putting in money to acquire some other company did not make logical sense.

But then, why are so many solution providers scouting for smaller companies in metros, A and B-class cities, that they can acquire? Why are they having conversations at the sidelines of various events on which are some of the upcoming companies in these cities which are finding it difficult to make ends match and would not mind merging with a bigger entity?

These were some of the questions which guided our cover story. What started out as an article on successful mergers in the channel community changed to whether it made sense for SPs to consolidate or get merged at all.

And the story did throw up some interesting insights. There are people who believe that a slowdown is the best time to acquire new companies, as valuations are low and companies which are cash strapped are always on the lookout for takers.

At the same time, the best time for innovation is always during the slowdown. So if a solution provider wants to start offering newer technologies then a good option is to join forces with another company which is already in that business domain.

Of course, there are the other types of people as well, those who feel that consolidation is over-rated and it is not prudent to opt for it at this point of time. Those who feel that now is the time to improve internal processes and functions than to invest into another company or spend time trying to assimilate them into their own.

This is why the subject made for a very interesting read. I do hope that you enjoy it. I would love to hear your opinions about it as well. It might even act as fodder for a future article. Write to me with your comments about this article and the others in this issue.

Vinita Bhatia
vinitavs@cybermedia.co.in

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