Pros and Cons of Doing a Deal with EMC and OuterBay

Case Study: OuterBay and EMC
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Case Study: OuterBay and EMC
Question One
The advantage of OuterBay getting a deal with EMC is that OuterBay gets a big vendor endorsement, improving its market credibility. The credibility increases the company's revenue which it can use to expand. The deal also allows OuterBay to block out competitors like Princeton. Additionally, the credibility gained from the deal can help the company secure other more profitable deals with more prominent companies. The expansion and increase in revenue can help the startup build and go public.
The disadvantage comes in because, after the deal, EMC will be able to have some of their people in OuterBay's board meetings and can influence the daily operation and decision-making at OuterBay. OuterBay will also be captive to the requirement channels provided by EMC. The above are the demerits that Michael Howard sees and the likes of Mark Burton cannot. When the deals go through with exclusivity, the EMC can block other deals OuterBay may wish to do with other companies. However, at the same time, if EMC gets into a similar deal with Princeton, OuterBay will suffer because their competitor now gets the advantages that we discussed earlier.
Question Two
The significant advantage that Scott Menzel, EMC's Technical Investment Strategist, gets from the Original Equipment Manufacturing deal is that his company, EMC, gets to acquire new software. OuterBack had also guaranteed EMC that they would provide source codes for the machine in the event of a change in control. OuterBay specializes in data management and develops products that improve the performance and availability of business-critical applications.
The software helps EMC to forecast and monitor its data growth. The software also helps to identify inactive data and relocate them across storage classes and assets. Additionally, the software helps EMC retain transparent data access, allowing users to view achieved data from the original application. Lastly, EMC can establish and enforce retention policies that manage the entire data lifecycle with the software. Another advantage is that the OEM deal provides EMC with additional products to sell and smoothens the information lifecycle management.
According to Scott Menzel and EMC, the major disadvantage of the deal is that a competing company can buy OuterBay after the agreement is finalized. The deal gives OuterBay a channel to get involved with some of EMC's sales process. Such opportunities and weaknesses can be dangerous to EMC. A competing firm acquiring OuterBay worsens the situation b...