Tips for the Acquisitive

By Rich Tehrani, CEO, TMC  |  November 01, 2010

This article originally appeared in the November 2010 issue of NGN.

TMC blogger Peter Radizeski may have set two records in breaking news of two acquisitions in one day. If that isn't a record, certainly the fact that both acquiring companies start with the same five letters has to make it into the Guinness book.First there was BroadSoft acquiring Casabi. Next there was Broadvox (News - Alert) acquiring Cypress Communications, which Peter broke on TMCnet and followed up on after the companies made the announcement official. Paula Bernier (News - Alert), executive editor at TMC and the editorial manager of NGN Magazine, added her opinions to the mix in a TMCnet posting the day the Broadvox-Cypress news broke, and discussed the deal in a carrier consolidation cover story in November’s issue of INTERNET TELEPHONY, a sister publication to NGN Magazine.

BroadSoft is buying Casabi (News - Alert) for approximately $1.95 million. Casabi outfits cable, landline and mobile telecommunications service providers with hosted SMS, customized information services, and unified communications. The Casabi acquisition will build upon BroadSoft's software-as-a-service offerings, which began with the acquisition of PacketSmart in late 2009, according to BroadSoft.

"Broad adoption of individual applications, such as SMS, demonstrates that consumers value features that improve a family's ability to communicate with one another across multiple devices," says BroadSoft CEO Michael Tessler. "We believe that, by incorporating Casabi's services into our Consumer Experience solution, we will help operators improve customer retention by delivering new innovative services to the home. We also expect to leverage the Casabi technology to further serve the communication needs of the small business market."

Meanwhile, Broadvox is known as a SIP trunking services specialist, catering both to carriers and small and medium enterprises in the U.S. and Canada. But recently the company, which has an eye on expanding its penetration in enterprise accounts, began broadening its portfolio to include cloud-based services liked hosted IP PBX (News - Alert), which it sees as complementary to SIP trunking. Meanwhile, Cypress Communications helped define the unified communications as a service category and has been providing hosted communications to small and mid-sized businesses and enterprises for more than 25 years, according to the companies.

My thoughts on such mergers and acquisitions are fairly simple and straightforward. These mergers generally don't work out the way they are intended. That’s because running a company is different than integrating a new one. To be successful, companies need to do both well.Many Nortel insiders, in fact, attribute the company’s eventual demise in part to making acquisitions that the company didn't integrate well.However, the rewards for a company that has learned how to acquire are absolutely tremendous. Where would Cisco (News - Alert) or Oracle be without M&A?TMC is often made aware of such mergers weeks or months in advance under embargo, and I can tell you we will see many more over the next few months. Of course every acquiring company wants to be the next Cisco – and, indeed, some will make it there, or at least get closer.In the mean time, to acquiring companies, I would like to offer the following suggestions:

·         Integrate fast. Do not leave your new workers hanging in any way in the first few weeks.

·         Try not to rock the boat with your acquired customers.

·         Do not lose site of the potential importance of the brand you buy and what it means. Don't rush to kill it too quickly as to many customers and the media it may be stronger than yours.

·         M&A is not a substitute for branding, marketing and sales support. You need to amp up all of these after you do an acquisition.

·         Be sure you spend more time with the media after the merger to make sure they understand your direction. If you don't, they will guess at your intentions in writing and potentially be wrong.

·         Do not assume the workers in the acquired company are inferior in any way to the new parent company – quite often they can be better in my experience.

With that said - happy acquiring!

Rich Tehrani is CEO of TMC. In addition, he is the Chairman of the world’s best-attended communications conference, INTERNET TELEPHONY Conference & EXPO (ITEXPO). He is also the author of his own communications and technology blog.

Edited by Stefania Viscusi