Avaya is back in the news. Followers of the Bach Seat will recall that Avaya declared bankruptcy in 2017. Now the buzz is that Santa Clara, California-based telecommunications equipment and software firm is considering a leveraged buyout offer.
Reports are circulating that Avaya’s (AVYA) board of directors is evaluating an offer from an unnamed private equity firm. Reportedly the offer values the Lucent spinoff at more than $20 per share, people in the know told Reuters. The private equity firm values Avaya at more than $5 billion, including $3.2 billion in debt.
Avaya is one of the world’s largest providers of telephony systems. It was spun off from Lucent Technologies Inc in 2000, which used to be part of AT&T (T). The LBO comes 15 months after Avaya emerged from bankruptcy protection, with a $8.3 billion debt legacy from a previous leveraged buyout by private equity firms TPG Capital and Silver Lake in 2007.
Avaya has tried to shift its revenue model to focus on cloud-based communications solutions with recurring software and subscriptions fees and not its traditional hardware business. Its legacy business is becoming more commoditized and dated. Much of Avaya’s new focus involves cloud services like unified communications as a service (UCaaS) and Contact Center as a Service (CCaaS). A new Device as a Service (DaaS) offering has also surfaced.
Avaya’s contact center business has also attracted acquisition interest in the past from private equity firms, including Clayton Dubilier & Rice LLC, Hellman & Friedman LLC, and Permira Advisers LLP. Hellman & Friedman and Permira own Genesys an Avaya competitor.
As of September 2018, Avaya had about 8,100 employees worldwide, including 2,800 in the U.S.
Private equity firms have recently focused on communications businesses. Among those companies are Aspect Software, Mitel, and PGi, each privately held by such firms. Note, too, that Polycom had been a Siris Capital property until its recent acquisition by Plantronics.
Related articles
Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.