In 2023 there were several significant mergers and acquisitions in the enterprise communications space. They may not have been for eye-popping sums, but they all represent strategic shifts.
We began 2023 cautiously. The first half of this year proved to be challenging with war, high inflation and interest rates, limited access to new investment funds, and even bank failures. The world of enterprise communications was already caught up in post-pandemic adjustments and was attempting to ascertain the disruptive potential of generative AI.
Although 2023 didn’t have any eye-popping comms-related mergers and acquisitions, they are coming soon. In 2023 it was mostly mid-market deals. The questionable economic outlook created M&A opportunities for both buyers and sellers. The buyers were looking to solidify their portfolio or staffing gaps, and the sellers were looking to monetize less strategic assets while streamlining their portfolio.
TalkingPointz monitors comms M&A activities and selects the most significant ones in this annual No Jitter post. For 2023, seven deals deserve some recognition. They are selected not because of their size but because they represent essential shifts. Of course, the year isn’t over, so it’s still anyone’s game. The following mergers and acquisitions are listed in the order they occurred.
VERINT AND QUDINI
From Qudini, Verint acquired appointment-scheduling technology. The acquisition is an additional expansion of the scope of the contact center. When we think of contact center scheduling, most of us will consider internal use cases such as shift scheduling. Verint wants us to think about external use cases such as customer appointments, both online and in stores.
The technology assists with customer scheduling and facilitates appointment bookings, virtual meetings, access to facilities, and reserving equipment for customers, prospects, and partners. In acquiring Qudini’s Retail Choreography solutions, Verint gained a new Queue Management System that can be integrated with appointment booking. It’s a nice example of how customer service is transforming into customer journey. The solution extends into physical locations, such as retail stores and banks. The solution can route customers to the best resource, and also provide them wait time information. Verint is also piloting a new approach to shift scheduling.
MITEL AND ATOS
This February announcement recently closed, and Mitel has now acquired Unify Communications from Atos. This is a good thing for both companies. It’s not clear to me that Atos ever wanted Unify. It likely got bullied into it by Siemens as a means of managing/supporting one of its largest clients as Atos took several years assisting Siemens in its migration to Microsoft Teams.
The Unify story is actually quite tragic. The telephony and networking giant was initially spun out of Siemens AG in 2008. First it went to private equity and then to a Global Solutions Integrator, and lost significant assets, divisions, staff, and momentum along the way. Even the unit’s name changed multiple times. It rebranded as Unify in 2013, but the new brand disappeared soon after Atos acquired it in 2016. Atos brought back the Unify brand likely after realizing it made sense to sell the unit. Atos also mismanaged itself and recently appointed its third CEO in less than two years.
Back in 2013, the company previewed a futuristic concept for communications referred to as Project Ansible. It was an ambitious project to redefine enterprise communications. The board only partially funded the project, giving us the less-than-slack solution known as Circuit. Atos retired Circuit, and RingCentral currently owns the product. One could argue that the innovation gap was ultimately filled by Slack, which Salesforce acquired for $27 billion in 2020. Presumably more than the sum of what RingCentral and Mitel paid.
Moving forward, Mitel and Unify look great together. The companies have remarkably complementary regional footprints of customers and partners. Unify also increases Mitel’s average customer size and brings with it a strong professional services business. And, both companies partner with RingCentral for UCaaS.
ZOOM AND WORKVIVO
The UCaaS sector stepped up during the pandemic, and online meetings were the key to survival for many companies. While UCaaS nailed online meetings, the pandemic exposed a major gap regarding informal communications for remote staff. The UCaaS industry didn’t have a good solution for virtual water coolers or serendipitous interactions.
Many organizations have attempted to recreate social networks for work, but it’s been a difficult puzzle to solve. However, the problem and solution are clearer post-pandemic and hybrid work adds an additional dimension. Workvivo, a small Irish firm, was getting traction in this area and experienced triple-digit growth in the three years prior to acquisition. Its customers include large and small brands. Zoom saw this and pounced.
While the pandemic is (hopefully) behind us, the need to address informal communications for remote staff remains. The propagation of company culture is one of the top-cited reasons for return-to-work mandates. A solution for informal communications is critical to the success of organizations with distributed, remote teams which many predict will be part of the new normal.
RINGCENTRAL AND HOPIN
It certainly seemed like physical, in-person events returned in 2023, but at least a few of the ones I attended were hybrid events. Over the past five years, UCaaS has expanded from telephony to messaging and meetings. It seems likely that virtual and hybrid events may be the next greenfield for UCaaS. An online event is more than a webinar, and a hybrid event is more than a physical event with online sessions.
During the pandemic, Hopin experienced explosive growth and investment for its virtual events. It built an all-in-one event management platform that enables planning and producing virtual and hybrid events. RingCentral acquired this events solution from Hopin. The acquisition included technology assets, customer relationships, and engineering, product, and go-to-market talent from Hopin.
RingCentral Events launched last month. Several other UCaaS providers have solutions for events, including GoTo, Cisco (acquired Socio last year), and Zoom.
FIVE9 & ACEYUS
Aceyus provides services around data integration, and is particularly effective at CX data aggregation. Over the years, the companies have partnered on multiple accounts. The technology helps Five9 collect and leverage data for real-time AI and automation-driven customer journeys. The acquisition of Aceyus also delivers a significant expansion of Five9’s analytics, reporting, and data lake capabilities.
The addition improves three plays for Five9. First, it helps with the implementation and operation of larger customers. It offers many of the same benefits as a customer data platform (CDP) but without all the overhead of new databases. Secondly, customer data is the fuel that powers AI, and Aceyus unlocks data. Lastly, it gives Five9 an incumbent seat at the table of many customers who will be evaluating new contact centers.
NICE AND LIVEVOX
CCaaS started as a cloud-delivered option for contact centers, but its scope has steadily expanded into contact center adjacencies, such as workforce engagement management (WEM), recording, and carrier services. With the acquisition of LiveVox, NICE will further expand its outbound capabilities. Valued at around $350 million, this purchase is anticipated to close in early 2024.
Outbound calling solutions are still largely associated with spam and collections calls. However, that’s changing thanks to predictive analytics. LiveVox, a San Francisco-based provider, is known for its AI-powered outbound engagement capabilities. Livevox leverages data across channels to determine the most effective messaging and channel to reach outbound targets.
This acquisition further validates a trend of combining inbound and outbound systems for a more comprehensive customer experience. More significantly, it’s another example of how CCaaS providers are continuing to leverage their own data and AI with their omnichannel capabilities to deliver customer value and create competitive barriers. The acquisition is complementary to NICE’s 2021 acquisition of ContactEngine.
OOMA AND 2600HZ
UCaaS provider Ooma acquired platform provider 2600Hz. Initially, it appears to be a customer (Ooma) acquiring a key supplier (2600Hz), but it’s more than that. This acquisition is expected to contribute around $7M in annual recurring revenue to Ooma. It’s also an “acquihire” and the transaction means that Ooma now owns and controls its own technology stack.
What I didn’t fully appreciate at first is that Ooma intends to use 2600Hz to expand into the service provider space. There’s a large base of service providers on older platforms from BroadSoft, Genband, and Metaswitch — all of which have been acquired. A new generation of options are available to service providers and they don’t all involve hosting a platform. Ooma joins a new wave of vendors that are going after service providers with a diverse set of benefits and wide range of approaches, including Alianza, Crexendo, Enreach, and Intermedia to name a few.
MY FINAL THOUGHTS ON ACQUISITIONS AND OTHER TRENDS
That’s my list for 2024, but admittedly, this year isn’t over yet. In 2024 I expect to see more deals and bigger deals. The fear factor of the overall business environment seems to be declining, and the disruptive potential of AI continues to grow. AI and access to data will be the big categories, but I also expect to see ongoing activity around digitalization and decarbonization.
The sector is already well-positioned. UCaaS and cellular services are converging, remote work means less commuting, hybrid work is becoming normal, and hybrid events are increasing. We are starting to see management platforms measure energy efficiency, devices made with recycled materials, and shipped in sustainable packaging. I expect these trends will continue, and enterprise comms will become more strategic to broader, enterprise initiatives.
Source: GWFM Research & Study