It would seem that cloud communications and managed services provider Fusion Telecommunications has some pretty ambitious New Year’s resolutions for 2014. Today, January 6th, the company announced the completion of its acquisition of Broadvox LLC’s cloud services business, thanks to a successful round of financing worth $44 million.
"We are extremely pleased that the Broadvox cloud services team, partners and customers have joined Fusion,” said Fusion Chief Executive Office Matthew Rosen. “This transaction, our second acquisition of a cloud services business in a little over a year, brings us one step closer to realizing our vision of becoming the largest and most successful provider of cloud solutions in a rapidly growing market.”
Why it's Important: Now with over 10,000 customers and 500 distribution partners, Fusion is set for rapid expansion in the cloud services space.
The acquisition, officially completed December 31, 2013, looks to bolster the company’s presence in the small and medium-sized business segment, particularly in the legal, hospitality and real estate verticals. Under the arrangement, the Broadvox cloud services unit will be wholly integrated into Fusion’s cloud services division, NBS, which was similarly acquired by Fusion back in November, 2012. At an aggregate purchase price of $32.1 million, the deal adds 5,800 small, medium and large business customers and more than 300 active distribution partners to Fusion, more than doubling Fusions previous customer base, along with nearly 100 sales, marketing and support employees. The company thus hopes to gain a even stronger foothold in the cloud communications, cloud connectivity, cloud storage and security services market.
Funding for this acquisition came from a combination of $15.6 million in equity transactions, consisting of Convertible Preferred Securities and Warrants to accredited investors, and $25.5 million in 5-year senior notes issued to the company’s existing lenders Praesidian Capital and Plexus Capital. The closing of this round of funding thus marked the completion of the acquisition process.
“The strong support we received in the financing from new and existing shareholders, Directors, Advisory Board members, and from financial partners such as Praesidian Capital, Plexus Capital, and several other notable institutions and individuals, reaffirms our confidence that we have the right strategy for growth," Rosen said. "This financing advances our cloud services strategy with an acquisition that will allow us to rapidly scale, accelerate our organic growth and effectively plan for additional strategic acquisitions as we emerge as a leading provider in the cloud services marketplace."
Indeed, the move seems like a wise one, as in the first nine months of 2013 alone, Broadvox generated revenues of $2.45 million, of which over 90 percent is recurring with more than a 65 percent gross margin. Just last month, meanwhile, the company announced several major upgrades to its Communicator set of application and renewed its Avaya compliance certification, priming its SIP trunking services for wider adopter. Moreover, as a result of the combined services, Fusion expects to see nearly $2.3 million in cost savings, half of which took effect instantly. Such operational savings, coupled with a nearly doubled market reach, are sure serve as a foundation for accelerated growth in the months ahead.
In a statement, Don Hutchins, Fusion's president and chief operating officer, voiced his excitement at the prospects for future growth with the acquisition, saying, “Our integration planning confirmed our belief that the combination of our businesses will help us achieve our financial goals, build scale and deliver leading edge cloud solutions to our expanding base of customers."
Going forward, we can thus expect Fusion to continue making ambitious moves in the cloud services sector, with future acquisitions likely on the horizon. With significant financial backers, this is a certainly a company to keep an eye on.
Edited by
Cassandra Tucker
