Unified communications M&A – talk isn’t cheap
Published September 2016
The B2B communications market has undergone something of an overhaul in recent years with a wave of M&A driven by growth, synergies and capability convergence underpinning sustained increases in trading and transaction multiples. The Unified Communications (UC) sub-sector has been a notable market theme as platforms extend their capability to enable full voice, video, document and data collaboration for SMEs through to enterprise companies. Within the broader UC space, a notable shift is also being seen in the conference calling segment with traditional conferencing minutes being substituted by web and video conferencing requiring players to be able to offer a combined solution to cater for all needs.
These trends have driven notable M&A activity with the likes of the Beech Tree Private Equity-backed £35m MBO of UC provider Wavenet and Maintel’s reverse takeover of managed communications services company Azzurri (£49m, 15.8x EBITDA) at the smaller end of the market and, moving up in scale somewhat, the acquisition by the US private equity firm Siris of both the conferencing and collaboration provider PGI ($979m, 13.2x EBITDA) and the hotly contested Polycom (collaboration) acquisition ($2bn, 9.1x EBITDA). Vodafone, Ring Central, Citrix, fuze, Vonage and Mitel have also all made UC-related acquisitions in the last two years to broaden their capability in the space.
We expect continuing M&A activity by trade buyers at attractive multiples for strategic assets and that PE interest will selectively continue for high growth UC integrators in the attractive SME and small enterprise focused space. These themes are explored further in our latest UK telecoms market M&A update.