Did IBM or SUN Really Want the Deal?

How much do you really want the deal?

In any business negotiation, knowledge is power. One thing you know that the other party does not know is how much you really want the deal or not. This knowledge is one of your most valuable assets, and you should hold it close to your chest.

This past Monday, a big deal went down in the tech world. Oracle www.oracle.com acquired Sun Microsystems www.sun.com after Sun’s negotiations with IBM www.ibm.com failed. See CNN article: http://money.cnn.com/2009/04/20/technology/sun_oracle_ibm/?postversion=2009042013)

Oracle paid $7.4 billion for Sun Microsystems, while IBM had offered $7 billion. Sun had negotiated with IBM for weeks, and IBM had been very interested in acquiring Sun’s Java platform.

Now, IBM has not issued any public statement but analysts have speculated that it did not really want the deal, and that it is not threatened by an Oracle-Sun merger. Furthermore, it seems Sun has a server division which is in trouble, and fixing that division may be a challenge for Oracle.

It is possible that IBM knew all along that Oracle would want Sun, and further, that Oracle would be put at a disadvantage because of the server business. And perhaps IBM knew throughout the negotiations that it didn’t want to acquire Sun. Nobody but IBM negotiators knows how much they wanted the deal or why exactly they chose to let this one go.

In this case, negotiation may have been a tactic for IBM to achieve business goals other than to acquire Sun Microsystems. Perhaps IBM wanted to learn more about Sun or wanted to see if Oracle would want Sun. We don’t know. But we can surmise that IBM did not really push for a deal.

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