New Conglomerates: After the Deluge

I found an interesting post on SandHill.com by Ken Bender of the Software Equity Group, entitled After the M&A Frenzy:  What's Next?

One of my recent memes is that the mega-players in enterprise software are becoming new conglomerates. They seem more driven by size for size's sake than by driving the synergies of integration.  When you talk to people in different divisions of Oracle they sound like they work in different companies.  The same is true for SAP, despite its much more organic growth.  It's undoubtedly true for people who work with Inxight within Business Objects within SAP.

While everyone seems to think Oracle is on track to become General Motors, maybe they're actually on track to become ITT.

What happened to the conglomerates?  Well, realizing that there were no real synergies to be had by combining such a broad range of businesses, many companies were spun out.  The bizno-fashion pendulum swung from size to focus.

I think the same thing is likely to happen in enterprise software, and the recent SandHill blog comes to a similar conclusion.  Excerpts from the discussion of large software vendors (bolding mine):

It’s almost a law of nature



expect a good number of public software companies will shed non-performing and incongruent product lines and business units

They go on to discuss the impact on private equity (PE) owned software conglomerates as well:

They’ll really have little choice. The debt leverage on these acquired companies assumes continued economic expansion

many PE investors will opt to shed non-core business units

Seems like someone should create a company to buy all these units at fire-sale prices as they're spun out of the new public mega-player and private equity conglomerates.  All I ask is a board seat in return.