The ultimate open-source M&A 'poison pill'

Those who consider acquiring an open-source company must be careful not to upset the associated open-source community. Is there such thing as a hostile takeover in open source?

Luis Villa commented on an earlier post wherein I had asked, "Why doesn't Oracle just buy Red Hat?" His remark was, "Because Red Hat employees would leave en masse."

Think about that. To the extent that an open-source company is driven by a culture of freedom , would-be purchasers might be put off by one of two things:

1. A business model that doesn't mesh well with open source (especially the GPL), or
2. An open source company culture that rejects the acquiring company's culture.

The first hurdle can be overcome through education or adoption. This is what happened with Novell. Novell acquired Ximian, in part, to get its DNA. That DNA continues to inform and guide decisions at Novell.

The second hurdle can't be overcome by any amount of subtlety or deception. Given that open-source businesses are driven by the people who write the code and build communities, a hostile takeover simply won't work. You lose the people, you lose the company, you lose your investment.

Is it the ultimate poison pill? If so, what are the companies that can credibly acquire an open-source company? IBM? Yes. Novell? Yes. Oracle? Maybe (Oracle has cultural fits with some open source-based companies, though not with all). Adobe? SAP? BMC? Etc.


Tech Culture
About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.


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