One part of the tech diligence is to know what the integration looks like and get a head start on any planning activities so you aren’t caught flat-footed when the deal closes and have 9 months of work to get done in 3. The other part is reading the tech landscape. This part is more important as it will not only give you an idea of the integration challenges ahead, but also how much runway you have after integration.

Lately, I’ve been using BlackBerry as the poster child for tech on the down-swing, but there are others, and as the saying goes, each situation is unique.

As a hypothetical, if you found out your potential acquisition target uses AppDynamics for app observability, would this pose an issue?

ANSWER: It depends.

Cisco bought AppDynamics within a day of the company going public January 2017, and at this point of time, since Cisco will not be going under anytime soon, it meant the product will be maintained for the foreseeable future.

At the time Cisco was making a play in the observability space and AppDynamics was considered a crown jewel. Over the years, there have been a few changes in the space with an emphasis towards the cloud and information security. On March of this year Cisco acquired Splunk, who is also a competitor in the space.

When it comes to the impact, it was reported that Cisco is emphasizing Splunk over AppDynamics. While I doubt AppDynamics will go away, development on their on-prem solution has effectively stopped. For those using the cloud offering, I’m willing to bet that Cisco will push towards switching to Splunk going forward.

From a consumer standpoint (and if you happen to be acquiring a company that uses AppDynamics), the offerings of the two may get blended in the distant future, but near term, I would expect an increase in licensing costs to maintain the status quo of Splunk’s pricing model, and a forced migration to Cisco’s cloud platform at a minimum.

Is this something you accounted for as a part of your due diligence?

Is your scenario different? If so, I’d love to hear it!

cab