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Analyst Insight

The Top 10 Acquisitions of 2019

Despite a slowdown in merger and acquisition activity this year, companies like RingCentral, NICE, Ribbon, Five9, Vonage, and others made several key deals.
Headshot of Dave Michels, of TalkingPointz
Dave Michels
December 30, 2019
2019 was a slower year for enterprise comms mergers and acquisitions. This year, I tracked 31 acquisitions, compared to 51 in 2018.
 
Sometimes, an acquisition makes perfect sense right away; others are less obvious, and some are just clearly bad ideas. Announcing an acquisition is the easy part; the hard part is what comes after. There are so many variables that it’s no wonder success is elusive. Study after study puts the failure rate of mergers and acquisitions somewhere between 70% and 90%.
 
There’s certainly good reason for M&A in enterprise communications. Acquisitions are usually the fastest way to fill a product gap, and with so many simultaneous transitions occurring in the market, there are plenty of gaps. Whatever is being acquired clearly has some perceived value, but that value varies widely. It might be the customers, technology, or in the case of acquihires the employees.
 
Consider how the market was shifting in 2019:
  • As telephony became harder to differentiate, providers turned to meeting services.
  • AI became a critical part of the enterprise communications solution.
  • There’s been tremendous activity in the contact center space as the vendors respond to the shift to cloud-delivered services, opportunities with artificial intelligence, and the increasing complexities of omnichannel.
As a result of these transitions, there’s been a steady flow of acquisitions. Here’s my top 10 list of enterprise communications acquisitions announced in 2019, listed in calendar order:
  • Aspect and Vector – Vector Capital not only acquired Aspect Software but invested an additional $100M in the venerable contact center company. The company remains a reasonably large provider of contact center and WFO solutions with some 2.19 million agents and has returned to growth. Its revised strategy is back to large enterprises with a focus on analytics, APIs, and to revive core products without a forced migration.
  • RingCentral and Connect First –  Terms weren’t disclosed, but RingCentral turned this acquisition into an outbound contact center solution, positioned alongside its InContact offer. Along with Dimelo, RingCentral has a diverse contact center offer. The Connect First team remains largely intact (actually larger) in Boulder, CO. I expect more fruits to come from this acquisition.
  • Enghouse and Vidyo – Enghouse stole Vidyo for a mere $40 million from its tired investors. The state of finances wasn’t made public, but $40 million is less than its annual revenue of $60 million. Of course, Enghouse, the silent giant, has had little to say about video or Vidyo since the acquisition. Vidyo was a video pioneer that was once poised as a disruptor with its scalable video codec technology. It had formed significant alliances with partners/customers, including Google, Nintendo, Barclays, Mitel, Fuze, 8x8, and Kaiser. In the past few years, the company pivoted from enterprise video to CPaaS and focused on healthcare applications. Vidyo may prove to be complementary to Eptica, a customer engagement solution that Enghouse acquired in October.
  • Zendesk and Smooch –  Last May, Zendesk acquired Smooch, an omnichannel solution that was one of the first partners for the WhatsApp Business API. Zendesk has steadily been acquiring and developing a complete customer engagement solution. Last year, Zendesk launched a new CRM play called Sunshine and launched an omnichannel platform called Suite (which uses Smooch).
  • NICE and Brand Embassy – NICE acquired Brand Embassy to power CXone’s Smart Digital Conversations. This allows organizations to put digital at the forefront of their interactions with consumers. The integration enabled 30+ supported channels, including Facebook Messenger, Twitter, Apple Business Chat, WhatsApp, LinkedIn, SMS, email, and live chat.
  • Calabrio and Teleopti –  The combination created one of the larger workforce management companies that offer cloud-based customer experience intelligence. The workforce management sector is experiencing significant changes. For example, quality management (QM) core technologies and scope are evolving AI technologies. The data-intensive tools are benefiting from new AI-powered approaches, and the solutions now include areas such as coaching and eLearning. Scheduling too will be squeezed by broader enterprise scheduling apps. Augmented agent technologies will change training.
  • The Merger of T-Mobile and Sprint –  Although the fat lady hasn’t sung yet, no list of top comms mergers in 2019 would be complete without this mega deal. The Justice Department has already approved the T-Mobile and Sprint merger, and DISH will emerge as a tiny new national cellular provider. T-Mobile even agreed to pay DISH an anti-competitive tax up to $2.2 billion if Dish isn’t successful. The highly controversial merger is expected to raise the prices of cellular and speed-up the deployment of 5G. Several states are fighting the merger in court with NY and CA leading the battle. The lawsuit is the only remaining barrier to the merger, which is generally expected to complete in early 2020.
  • Vonage and Over.ai –  Vonage announced intent to acquire certain assets from Over.ai, a Tel Aviv-based voice and conversational AI provider. Vonage acquired Over.ai's technical team and intellectual property for general incorporation into its VBC portfolio. This should be viewed as an acquihire: 23 AI-experienced engineers joining Vonage's R&D technology hub in Tel Aviv. Its acquisition strategy has created an impressive technology stack.
  • Ribbon and ECI Telecom –  Ribbon Communications entered into an agreement to acquire ECI Telecom Group Ltd (ECI), a global provider of end-to-end packet-optical transport and SDN/NFV solutions for service providers, enterprises, and data center operators. Ribbon will acquire ECI for 32.5 million shares of Ribbon common stock and $324 million in cash. ECI stockholders will also receive approximately $31 million from ECI's sale of real estate assets. Post-acquisition, Ribbon’s anticipated combined annual revenue will be over $900 million, serving customers in more than 140 countries, with 4,000 employees worldwide. Furthermore, the combined company will be better positioned to serve the 5G market. It’s a big and complex acquisition to complete. Soon after the announcement, the Ribbon CEO stepped down, and an executive search was initiated.
  • Five9 and Whendu –  Five9 announced its intent to acquire Whendu’s iPaaS platform. Whendu’s iPaaS platform provides a no-code, visual application workflow tool, optimized for contact centers. To date, Whendu has 50+ out-of-the-box application connectors. The likely goal of this acquisition is to fill the gap between applications and toolsets for addressing the needs of customized customer engagement.
 
2019 was a relatively quiet year in actual acquisitions, but rumors were persistent throughout the year. This top 10 list is very different from the one I posted a year ago. This one is dominated by contact center related acquisitions (only two last year). Email and UCaaS didn’t even make the list this year.
 
A few notable acquisition-related topics that occurred this year include:
  • The emergence of Poly, a result of last year’s merger of Plantronics and Polycom.
  • There was a rumored possibility that Mitel and Avaya would pull off a reverse acquisition, though this never materialized.
  • Open source communications are back. Last year, Sangoma acquired Digium, and this year it added VoIP innovations under its umbrella combining products, technologies, and services.
 
Dave is a contributing editor and analyst at TalkingPointz.

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