Last April, rumors broke that Alcatel-Lucent was looking to exit the enterprise space by selling off its enterprise businesses including Genesys. I speculated then, and stick to it now, that Siemens Enterprise is a good suitor (Cisco too, but unlikely). Reuters reports that the current front runner is actually Permira. Permira is a European private equity firm that invests in “TMT” or Technology, Media, and Telecoms. Perhaps you recognize some of their other synergistic TMT investments:
|Company name||Investment Date||Sector||Country||Transaction Size|
|Asia Broadcast Satellite (ABS)||2010||TMT||Bermuda||c.€180m|
Permira’s investment strategy is simple: “long-term investments in companies with the ambition of transforming their performance and driving sustainable growth.” That sounds perfect.
ALU has some valuable assets that could benefit with more aggressive management and vision, but Permira knows nothing about UC. Permira may indeed become the next big venture group to discover the complexities of UC.
Psssst: Want to Invest in Some UC?
Over the past several years:
- Cisco: Basically flat.
- Avaya: Flat or negative (private equity: Silver Lake)
- Mitel: Negative (private equity: Francisco Partners)
- SEN: ?, but not up (private equity: Gores Group)
- Microsoft: Flat
- RIM: down.
Of course, there is more to the story and evidence of success does exist:
- Interactive Intelligence
Though as I look at these two lists, the top one seems to represent a bigger portion of the industry than the second list. Plus I don’t see a lot private equity firms celebrating like its 1999 its 2010 after selling Skype.
Skype/Silver Lake is a great success story. But Skype is in a category by itself. ALUs enterprise efforts are in crowded sectors. Their best valuation will come from synergistic opportunities. I don’t see a lot of synergy with eDreams or Asia Broadcast Satellite.
This could be the best time to invest in UC. After several years of sluggish sales a potential economic recovery may be in the works, and a huge installed based of TDM and legacy VoIP are ripe for replacement. But as with any acquisition, a key asset is the people. It’s a company’s employees that create value. At least when not on strike. ALU’s employees aren’t so hot on the idea of getting new business cards. Eugene Liu of InsideCTI reports:
Alcatel-Lucent unionized workers in France are jittery about a deal and have already staged a strike. French labor laws are a valid concern here. Just this will discourage bidders that aren’t experienced in dealing with European labor and unions. [Not to mention the bidders that are experienced with dealing with these unions].
The unions evidently feel long term employment is more likely being part of a company losing money that doesn’t want them. Reuters stated that Alcatel is asking for employment guarantees for its French staff. Suddenly seeking Sydney. (Sydney Harmon purchased the venerable Newsweek publication for a dollar, and assumed all of its commitments.)
See Related Post: http://www.pindropsoup.com/2011/04/alus-silent-auction.html