Question

Dell had its management buyout in 2013. Dell, as a private company, acquired EMC, a publicly listed company, for $67 billion; the deal closed in September 2017. What are the synergy benefits and challenges for Dell and EMC since this acquisition? (List all 5 benefits and challenges)

Answer 1

Synergy benefits and challenges for Dell and EMC since this acquisition:
Dell had the specialization serving small and midsized customers and EMC serving enterprise customers. The merged (Dell-EMC) Entity has now a broader menu of services with a greater customer reach, generating relatively significant cash flows. Cost-savings and cross-selling between Dell's small enterprise customers and EMC's large enterprises, sets up Dell to move away from its flagging consumer PC business, creating potential for a "powerhouse of an enterprise company. The merged company is ‘private’ that provides Dell the flexibility to leverage the strengths of the two companies. The combined company’s revenue synergies were expected three times greater than its cost synergies. The revenue synergies were expected likely because of the result of EMC’s converged infrastructure making use of Dell servers and networking products. Involving VMware, the revenue synergies would involve substituting Dell networking products for those of Cisco Systems, VMware's current networking partner. The acquisition has given Dell a stronger claim to be the only IT vendor with a full set of products from the PC to the data center.
The acquisition incident of Dell-EMC resulted in more than $45 billion in additional debt, exposing Dell to interest rates, which are slated to be raised by the Federal Reserve over the next years. The acquisition event is results in more difficulties of integrating two different companies' cultures, and creating incentives for key people to stay in there. Leveraging EMC’s sales force is one of the biggest challenges of the merger, and that may be challenging at the Dell's ability to leverage the EMC's sales force, which is one of the strongest in the enterprise space. The leveraged consolidation sets the opposite strategies, which may split apart to be more nimble and take on start-ups that have disrupted the industry. Use of different operating systems within different companies coming together under single operating culture and also Keeping up with the changing demand.