What Happens When a Big Company Buys a Small One?

y6You might have read the news this week that Yamaha purchased Line 6. This is probably great news for Line 6’s shareholders, but the story may differ depending on your relationship with Line 6. Since I have been part of a small audio company that was purchased by a big company, I realized I my experience may help shed some light on how this purchase will play out. So here is my take on the likely outcome:

One of the biggest assets large companies have is their distribution muscle. The bigger you are, the easier it is for your products to get placement where it matters most. And distribution is the domain of the sales department. That in turn means that larger companies tend to be directed by decisions that are informed from the current contact lists of the sale force.

The big weakness of large companies is their aversion to risk and the tendency for middle management to stifle creativity as a byproduct of the desire to climb a much more enticing corporate ladder. Often large companies also have cumbersome and immutable policies that can destroy the cool factor of a recently purchased small company.

Of course, every company is slightly different, but in this case, Yamaha has a long track record of similar purchases, most memorably of Steinberg a back in 2005. What I recall hearing through the grapevine since the purchase was that engineering had been scaled back, and the unfixed bug lists started accumulating. In 2012 Yamaha announced a post-production mixing board designed with Steinberg, which seems to leverage Yamaha’s existing distribution capability and Steinberg’s production workflow know-how. There are several other similar products on their web site.  What I hear officially at this time is that no changes occurred at Steinberg, but I get the feeling that whatever their intentions, they will say nothing will change – it is standard procedure in order to make sure existing customers don’t jump ship.

So what is going to happen to Line 6?  Probably not much for the next 6 months. Whatever products were in the pipeline will come out on schedule. But after that you can expect to see the effects of a shift in focus from selling to guitar players, to selling to those contacts on Yamaha’s sales contact list. Existing product lines will show less attention, and in a few years, you might see a new product that ties in with Yamaha hardware come out. And of course, some of Line 6’s engineering talent will leave and find some great new companies to work for – like nuVibrations!

 

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