Mergers and Acquisitions, CSPs, Mergers and Acquisitions, Content, Unified communications

Sangoma Acquires UCaaS Service Provider Star2Star

Canadian CaaS provider Sangoma Technologies Corporation has acquired cloud communications services and software company Star2Star for roughly US$437 million -- or nearly 30 times adjusted EBITDA, according to ChannelE2E calculations.

This is M&A deal number 87 that ChannelE2E has covered so far in 2021. See all technology M&A deals for 2021 and 2020 listed here.

Sangoma Acquires Star2Star: Company Backgrounds

Star2Star was founded in a garage in Sarasota, Florida in 2006. The business’ offerings include voice, contact center, collaboration, integration, video meeting, Communications Platform as a Service (CPaaS) and Desktop as a Service solutions.

Star2Star generated approximately $79.4 million USD in revenue during the 12 months ending September 30, 2020. Over the same period, the firm produced over $14.7 million of adjusted EBITDA and adjusted net income of $2.6 million. Star2Star has total assets of $35.2 million and liabilities of $60.6 million, Sangoma disclosed.

The combination of Sangoma and Star2Star will generate more than $245 million in revenue, the buyer said. The combination will also enable Sangoma to deploy Star2Star’s cloud solutions to its global customer base in over 100 countries, where cloud-native solutions are relatively under-penetrated and less competitive, according to Sangoma.

Sangoma is also known for acquiring Digium in August 2018. Digium pioneered Asterisk, the open source PBX platform. However, Digium was somewhat late to the cloud/SaaS business model, and was better known for on-premises PBX hardware during much of its time as an independent company.

Sangoma Acquires Star2Star: A Long-Term Evolution

Bill Wignall, President and CEO, Sangoma
Bill Wignall, president and CEO, Sangoma
Norman Worthington, Founder and CEO, Star2Star

In a prepared statement about the Star2Star deal, Bill Wignall, president and CEO of Sangoma, commented on the deal,

“Customers today are demanding an integrated buying experience for all their communications needs and the combination of Sangoma and Star2Star will satisfy that need with the broadest set of cloud-native CaaS and related solutions in the industry. This transaction ensures we can meet any customer’s preference, be it for purely cloud solutions, or for on-premise deployments, or a hybrid combination, all the way from small businesses to large enterprises. For many years, we have consciously pursued a strategy to transform Sangoma from a product business to one of the communications industry’s leading SaaS companies. This deal is incredibly exciting not only because it will generate scale in a growing, consolidating space, but also because by combining with Star2Star we will have completed our long-term evolution into a leading cloud services company, one with annual revenue approaching $250 million.”

Norman Worthington, founder and CEO at Star2Star, added:

“We are thrilled to combine forces with Sangoma because we have so many complementary strengths. Sangoma was the perfect fit for us because they identified and appreciated our talented team, loyal customers and unique go-to-market approach. Star2Star has a differentiated channel approach, employing over 650 active partners across multiple types of channels, from resellers and interconnects, to managed services providers and enterprise technology partners to wholesale and white-label distributors. Finally, I’ve come to genuinely appreciate Bill’s vision for our combined companies. We share a view on how to profitably grow in this exciting market, a viewpoint that’s unique in our industry.”

M&A Activity: Unified Communications as a Service

Meanwhile, M&A activity in the unified communications market remains strong. Three deals since November 2020 include:

Here's a complete list of UCaaS mergers and acquisitions.