Cytracom, a provider of Unified Communications as a Service (UCaaS) sold through MSPs, has been acquired by private equity firm Sverica Capital Management of San Francisco and Boston. Financial terms were not disclosed.
This is M&A deal Number 127 that ChannelE2E has covered so far in 2020. See the complete M&A deal list here.
Sverica has experience in the MSP market, having previously invested in Synoptek -- a Top 100 Vertical Market MSP.
More than 2,000 MSPs (managed IT services providers) across North America leverage Cytracom's UCaaS services, the company says. The PE investment will accelerate R&D, sales and support for those MSP partners, the UCaaS provider asserts.
Cytracom's senior management team including co-founder and CEO Zane Conkle will continue to lead the company. Frank Young, general partner at Sverica, along with Michael Dougherty, VP at Sverica, will join Cytracom’s board of directors.
Sverica Acquires Cytracom: Executive Perspectives
Sverica described the deal as a majority investment in Cytracom.
In a prepared statement about the deal, Cytracom's Conkle said:
“Our focus has always been on enabling MSPs to deliver best-of-breed voice and messaging solutions. A huge driver of our growth has been our transformation from a pure-play Hosted VoIP solution into a comprehensive UCaaS offering. This investment from Sverica allows us to accelerate our growth and empower more partners with the leading channel-only UC solution for their portfolio.”
Added Sverica's Young:
“Through its commitment to innovation and reputation for reliability, Cytracom has positioned itself to take advantage of the tremendous market opportunity and widespread adoption of cloud communication solutions. We look forward to partnering with Cytracom’s senior leadership as they drive the Company through the next phase of growth.”
UCaaS for MSPs: More M&A Deals Coming?
Meanwhile, ChannelE2E expects more private equity firms to acquire UCaaS-focused companies that serve MSPs.
To date, the major MSP platform software providers -- Barracuda MSP, ConnectWise, Datto, Kaseya, SolarWinds MSP and others -- don't own UCaaS platforms. Each of those MSP platform business software providers has private equity backing.
Key PE players in the MSP software and technology platform sector include Thoma Bravo, Vista Equity Partners and Insight Partners, among others.
Among the additional players to watch: Intermedia, a big UCaaS player focused on MSP partners and backed by Madison Dearborn Partners since 2016.
Acquiring a UCaaS platform can be tempting, but the market also involves considerable complexity in terms of QoS (Quality of Service) requirements; compliance mandates; and, in some cases, state-level voice regulations that need to be followed.
