UC M&A: magicJack to Buy Broadsmart

March 16th, 2016 by · Leave a Comment

A little more consolidation in the world of what we once called VoIP hit the markets yesterday. magicJack VocalTec has announced an agreement to buy Broadsmart, which specializes in selling hosted unified communications as a service to medium and large enterprise clients.

magicJack's claim to fame has been the disruptive USB-based VoIP device they took directly to the retail market as an alternative to traditional phone service and the low cost network infrastructure they paired it with. As the shine faded from the consumer VoIP marketplace in more recent years and as its controversial founder Dan Borislow stepped back, the company has faded a bit from the mind of the market. But they're still out there, and now they've got a foothold in business UCaaS.

It's definitely not the first time we've seen a consumer-focused VoIP player pivot inorganically into the business UC market. Vonage has made several acquisitions at this point, with enterprise from business clients now accounting for 30% of its revenue. The business VoIP marketplace is where the growth is today and where differentiation can be found.

The price tag for Broadsmart is $40M, of which $38M will be in cash and $2M in stock. There's another $2M if the business achieves $15.6M in revenue in 2016. In 2015 Broadsmart did $13M in revenue with $4.6M in EBITDA and they were forecasting 20% growth for this year, which are not shabby numbers. Founders Todd Correl and Tom Tharrington will stay on as CEO and President of what will become a wholly owned subsidiary of magicJack VocalTec.

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Categories: Mergers and Acquisitions · Unified Communications · VoIP

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