CSP Buys MSP: Fusion Acquires Apptix, Reveals Valuation
Fusion Telecommunications International has acquired Apptix for roughly $28 million. The deal unites a cloud services provider (CSP) with an evolving managed services provider (MSP). Together, the companies have extensive SaaS, collaboration, unified communications and virtual desktop expertise.
Valuation: Apptix had about $25 million in annual recurring revenues and will deliver about $8 million in post-synergy adjusted EBITDA, the companies say. So in terms of valuation, the Apptix buyout was valued at roughly 1.1X revenues and roughly 3.5X pro forma Adjusted EBITDA. Generally speaking that’s a low valuation compared to many of the MSP buyouts and market valuation metrics we’ve tracked.
Still, M&A consulting firms like Cogent Growth Partners have warned MSPs that industry valuation metrics can be misleading, and multiple factors beyond EBITDA multiples ultimately formulate a company’s worth.
Together, the combined companies will have an annual revenue run rate of roughly $145 million and adjusted EBITDA of roughly 16 million, Fusion says.
Apptix Forced to Evolve
Apptix was an early leader in hosted Exchange but the company had to pivot as Microsoft Office 365 took hold. By mid-2015, Apptix sold the majority of its direct public/multi-tenant cloud customer base to GoDaddy for $22.5 million. At the time, Apptix said it would use the money to fund organic growth and potential acquisitions — pushing deeper into the MSP market. GoDaddy, in turn, migrated the acquired customers — mostly small business hosted Exchange customers — to Microsoft Office 365.
Now, Fusion and Apptix are striving to unlock new synergies today. Among the key synergies they claim they’ll achieve:
- Extends Fusion’s reach to the desktop and into the customer’s IT infrastructure, allowing for greater service control and increased customer loyalty and “stickiness,” while expanding the services Fusion can sell.
- Brings engineering and development resources to advance Fusion’s cloud computing infrastructure and service offerings, as well as a team of highly capable sales, implementation and support professionals
- Creates a large cross- and up-sell opportunity into Apptix’s 1,500 customers and into Fusion’s own customer base seeking more cloud services
Matthew Rosen, Fusion’s CEO, said:
“We believe that Fusion’s award-winning UCaaS and Contact Center solutions, as well as our secure and diverse cloud connectivity and security services, will connect well with Apptix’s existing customers, creating substantial cross- and up-selling opportunities into the combined Apptix and Fusion base of more than 13,000 business customers.”
We’ll be tracking Fusion and Apptix to see how the M&A deal performs over the long haul.
To track all VAR, MSP and CSP mergers and acquisitions, visit the ChannelE2E Milestones section daily.