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Broadsoft (and Others) For Sale

Rumor has it that Broadsoft hired a banker to look at a sale (to a private equity firm most likely). This rumor has been reported by William Blair, Yahoo News, Light Reading and more.

Note reports that Broadsoft is for sale are accompanying reports that 8x8, RingCentral and others are also looking at strategic options.

There are a number of indicators that UCaaS is in trouble: Avaya in bankruptcy; Shoretel being grabbed by Mitel; Broadview to Windstream - to name but a few. There is also the big problem that keeping the sales engine going at 20+% year over year is not just hard but impossible. [In Fusion's investor presentation on the Birch acquisition, FSNN notes that organic growth is 2-4%!!!]

Most providers are not profitable. Light Reading reports, "Like 8x8 and RingCentral, BroadSoft has been growing its business but has struggled to turn that growth into operating profits. In the second quarter of this year, the company reported a 9% year-on-year growth in revenues to $…
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Fusion and Birch

Every article just quoted the same paragraphs, including this very confusing one:

 "The Fusion/ Birch deal is an all-stock transaction in which Birch shareholders will receive about 73 million in common shares of Fusion valued at $3.85 per share and thus hold investments in the combined entity. That represents a premium of more than 200 percent compared to the prior trading day’s closing price. That, the release says, is five times the pro forma adjusted EBITDA of the business that is being acquired, including anticipated synergies."  [fierce]

By the numbers:

73 million shares at $2.59 is $189m in stock value... Fusion shareholders will own 25% of the combination while Birch shareholders will own 75%. (Shareholder lawsuits will happen.) FSNN has had a 52 week high of $2.59. It is at $2.21 right now.<< how is the stock valued at $3.85???  Fusion started the day with a market cap of $27.6M. FSNN is assuming Birch debt of $458M Prior to closing, Fusion will exit its Car…

4 More Channel Shows in 2017

Informa's Channel Partners Evolution is in Austin, TX on Sept. 25-28, 2017 at the convention center.Before that, partners will converge on Atlanta for One on One, the 14th Microcorp Event on September 10-11, 2017 at the Hyatt Regency. ChannelVision Magazine is an official Media Partner of The Alliance Partners’ upcoming Tech+Connect 2017 event, scheduled to take place at the La Cantera Resort in San Antonio, Texas, on November 6-8, 2017.  ChannelVision Magazine is also holding an event - CV Expo West - at the INCOMPAS Show on October 15-18, 2017 in San Francisco, CA.

Short Term Thinking as Customers Hanging Up the Phone

Business Voice has a history, and not in a good way. The non-ILECs have made voice an ordeal for business customers. It started when CLECs were selling Integrated T1s like hotcakes. LNP issues. RESPORG/ Toll-free problems. Deployment messes. [To be fair, when BellSouth launched BIS-T1, it was a disaster as well. A huge cluster of a F!] Intermedia.net gave an interview to CRN saying that "Every business needs a voice offering, and solution providers that aren't offering VoIP to their customers today are leaving money on the table." True. But voice isn't just a copper line any more. Cellular, SIP Trunks, TDM, Hosted PBX, UC, WebRTC in apps and more are available to replace the POTS lines. This only adds to the crazy. Plus compatibility and inter-operability issues for PBXs, faxes, alarms, elevators, paging and more. Key System Emulation makes me crazy. Intermedia continues, "I've been thinking about what's stopping partners from selling voice, and th…

INC5000 on Master Agencies

2017 INC5000 LIST OF MASTERS

CONGRATS! to everyone who made the list!

Carrier Sales  $18m almost double last year’s $10m. 
Telarus - $49m 
PlanetOne - $27m up from $23m last year; was at $19.5m two years ago.
TeleProviders which is run by  Jason Sharek, has $10.7m in revenue in 2016; up from $6m in 2011. 
ACS is at $3.4m.
Advantage Comms Gp (ACG) - $10M, doubled their revenue in two years. 
TeleQuality went from $17.7m to $23.8m. (They only deal with healthcare telecom)
Innovative Business Solutions (run by Michael Trede) up to $5.4m from $4.4m!
Mass Comm in NYC (run by Darren Mass) went from $21.6m to $25.6m.
eSquared Consulting (Josh Fulton) is at $12.8m; up from 2 years before at $7m and 55 employees. 
Global Comms Gp (GCG with Joel St.Germain)  … $7.5m – close to last year’s $7.2m
Tellennium is a TEM run by Greg Mcintyre with $37.7m in rev.
SandlerPartners   -  In 2016, Sandler Partners acquired X4. They said it would create an entity that was doing $65M in revenue. The 2016 INC5000 revenue sh…

What Do Bankers Have to do with it?

Last year, 8x8 hired bankers to perform due diligence about a reported buy-out. 8x8 wanted $1.2B+ and the buyer (reportedly Oracle) walked away.

RingCentral just hired bankers after a reported buy-out attempt supposedly by Google and/or Amazon.

 RC and 8x8 have a lot in common - they are both publicly traded pure play UC providers. Most of the UC providers are private - Fuze, Panterra, Jive, Evolve IP, etc. They are both ready to cash out.

Both also have to spend tremendously to keep the organic growth engine of sales rolling along. It started to slow down over the last two quarters but that may be due to not spending every sixty cents made on marketing efforts.

Think about the RNG Market cap of almost $3B. With Revenue of almost $400M, how many years would the ROI be on that?

Their biggest competitor is status quo. A business who rides out the premise PBX or switches to SIP Trunks instead of a pure cloud play.

Certainly Avaya's bankruptcy, Shoretel's sale and Toshiba's ex…