The Netfortris Acquisition

I wrote about Sangoma buying Netfortris HERE, but after speaking with Sangoma I wanted to add some color.

Spire Capital bought a chunk of Netfortris, a UCaaS, SD-WAN and MSP combo, in 2014 – about the time Telekenex renamed itself Netfortris. Then, in 2017, Netfortris acquired Fonality, an Asterisk powered UC provider known for its partners and its HUD (heads up display). Now Fonality is under the Asterisk/Digium umbrella with the acquisition by Sangoma.

Sangoma surprised me when they told me the deal has closed already. Sangoma gets 60K UCaaS seats, 6,000 billing customers and $50M in annual revenue for about 1.3x revenue. The deal is for $68M (The upfront cash amount was USD $48.8 million and the upfront equity amount was USD $19.2 million) with a $12M earn out for one year as the Netfortris sales team remains in place – and separate – to maximize the transition.

Sangoma already has a video meeting service, contact center, a CPaaS platform and a few unified communication systems from earlier acquisitions that include VoIP Innovations and Star2Star. Netfortris will bring more than just UCaaS. Sangoma’s portfolio will now include SD-WAN (powered by Fortinet and Velocloud), cyber-security (Threat Management), managed access, managed network and the ability to single bill.  This allows for many opportunities to cross-sell and make customers stickier.

Demand for both managed network and SD-WAN has been robust since the pandemic. Single Bill is something that SMB look for in order to keep things simple. This allows Sangoma to also address the SMB’s flourishing need for security.

Executives at the company were quoted as saying that this might open up the company to to acquire MSP’s in the future to bolster the managed services and security practices.

Sangoma has about 2 million on-premise seats that can be moved to cloud that they offer. This is all part of the overall strategy to upsell and cross-sell to every customer – and meet them where they are in the cloud – whether that is premise of not.

 

Netfortris will bring with it relationships with 700 partners that do not overlap much over current partners from Star2Star and other acquisitions.

There are more than a few vendors in the UCaaS space looking to exit, according to Jim Machi, EVP of Product Management and Marketing at Sangoma. Likely that means that there will be more deals “that make sense”.

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