With enough capital and technical prowess a Linux company could have swallowed that installed base almost whole and made money both in consulting and providing migration tools and packages to assist those companies one by one as they felt the need to migrate.  Add a little more capital and some marketing savvy to partner with a few software providers to build compatible Linux ports for key programs in a manner to make migration easier, and the coup would be complete.

But Caldera International rather obviously did not have the capital to implement this strategy.  So the question of "why" remains.

My short, and rather flip (but I suspect accurate) answer is "Yarro wanted to get into IBM's pockets".

This is not necessarily nefarious.  There were several instances through the nineties of IBM giving SCO what might be considered "life support".   Monterey was simply the last and most visible - visible particularly because SCO was so clearly little man at the table, and there on sufferance and charity.   I suspect that Yarro expected to negotiate an extension of Monterey or a new "treaty" with IBM to underwrite the above scenario.   In short Yarro expected to inherit the good will of IBM from SCO.

Now for a little speculation.  Not all good will is altruism.   Most of it is just self interest in another guise.  Long before there was a Caldera, Microsoft had a version of Unix for the x86 architecture.  It didn't do very well so after a while Microsoft sold it off ... to Santa Cruz.  But in and among the hereafters and wherefores was a little gem.  An agreement that Microsoft would not compete in Unix space.  

Now I don't know that the non-compete lasted through the nineties...  but it surely explains IBM's evident desire to keep Santa Cruz alive through some intercourse which otherwise looked about as implausible as Donald Trump dating Laura Didio.  

And I don't know that if it was still in effect that a change-of-control event vacated it.  But such self terminating covenants are common in such instances.  But such would surely explain why after being protective of SCO for years, IBM suddenly turned a cold shoulder, even to sending an almost immediate notice of termination of the Monterey agreement.

My guess is that Yarro did not know of the MS non-compete, and that he quite possibly thought SCO did have title to the SysV copyrights and that that accounted for IBM's friendliness towards Santa Cruz.   And he was immediately outraged to be discarded and disregarded without ceremony.  It explains some of his vitriol.

Certainly Yarro's character is now writ plain and it was obviously for IBM's best not to become involved with him, especially in a prolonged relationship.   But the question remains did IBM not deal with Yarro because of some awareness of his background and character, or simply and coldly because they had no further use for what was once SCO?

Likewise did Yarro buy the Santa Cruz Unix assets to capitalize and grow them as outlined above, or was the "buy me out" extortion the plan from day one?  

For that matter did Santa Cruz even know and understand why IBM consistently played protective big brother?    Or did they know but not convey the realities of that genteel relationship when Caldera approached them?  Whether they knew or not, of course, due diligence was Yarro's duty, and if I knew enough to write this from public sources, Yarro could have found out. (I remember explaining the Xenix non-compete to my boss when he wondered why SCO was part of Monterey) And IBM is free to choose its "friends" as it sees fit, for whatever reason.  

Possibly we'll never know Yarro's state of mind in buying SCO, but some history of the timing of his relations with Anderer and McBride might tell us when and where the Linux extortion scheme arose.