CSPs, Mergers and Acquisitions

Intermedia CEO Mike Gold Explains CSP Buyout


When Madison Dearborn Partners acquired Intermedia last week, the cloud services provider revealed a range of growth metrics that many rival CSPs would rival. But what sparked the deal -- and where exactly is Intermedia heading next?

ChannelE2E reached out to Intermedia CEO Mike Gold for more details about deal -- and potential next moves for the company and its channel partners.

As you likely know, Intermedia spent recent years diversifying far beyond hosted Exchange to introduce more than 30 cloud services that span  security; identity and access management (IAM); hosted PBX; backup; collaboration and more.

What's hot, what's not and where is Intermedia heading next? Here's the conversation...

ChannelE2E: When did Intermedia's former owners start negotiations to potentially sell the company?

Gold: "Negotiations with MDP started over the summer."

ChannelE2E: It sounds like Madison, in addition to buying the company, also is investing additional money into the company. True? If so, any thoughts on how the money will be used?

Gold: "MDP, with approximately $23 billion in assets, has the resources to make additional funds available for both organic growth and acquisitions. We expect, for example, to increase investment in our channel partner program and technology related to security, reliability and compliance. Potential acquisitions might include expansion into new product categories or vertical-specific bundles, entry into additional geographies, or consolidation of smaller companies that operate in similar product areas."

ChannelE2E: Does the buyout signal any potential shift in your channel strategy or channel partnerships?

Gold: "No, there won’t be any shift. MDP values our focus on the channel. We plan to continue to invest significantly into product, operations, support, sales, marketing tools, and differentiating programs like our Private Label model that gives partners complete control over everything from prices and margins to branding.

Recent talent additions such as Eric Martorano, our new senior vice president of worldwide sales, will be instrumental as we embark on this next chapter of growth. Eric brings a wealth of knowledge and experience from having spent close to the last decade scaling Microsoft’s channel programs and cloud business. He was the GM of Microsoft’s $17 billion US Partner business."

 (ChannelE2E Side Note: Here's more background on Martorano)

ChannelE2E: What percentage of your business is U.S., and what percentage is outside U.S.? Do you see that changing — I.e., any plans to launch an aggressive international push?

Gold: "While we have customers and partners in 190 countries, the vast majority of our revenue is in North America. We have 11 data centers and more than 700 employees around the globe. We have expanded with sales and data center infrastructure in the UK and Australia / New Zealand, and we are growing in these markets."

ChannelE2E: What are you seeing in the hosted voice and workspace as a service sectors, in particular?

Specifically, we're wondering if:

  • (A) you're feeling good about hosted voice as Microsoft ramps its own cloud PBX for Office 365; and
  • (B) if feeling good about workspace as a service (WaaS)? ChannelE2E hears so much about it from so many startup providers, but we sense many of them are struggling to formulate winning strategies in terms of technology and/or biz models.

Gold: "Intermedia’s Cloud PBX business is growing at an incredible rate - faster than publicly traded cloud PBX players. Today our cloud voice network monitors and maintains more than 1 billion minutes per year across over 3 million phone numbers, and we have great customer feedback and very high customer retention. We feel great about this business going forward. We have achieved these numbers due in part to our channel enablement efforts. We’ve developed proprietary quality of service tools such as VoIP Scout precisely to help partners establish solid customer relationships from the onset. We give partners the flexibility to choose, on a customer-by-customer basis, among 3 partnership models.

Regarding workspace as a service, we see this as a potential new market for us; however, it’s not one that we are pursuing today. Only a handful of our partners have asked for it so far. That said, our partners' feedback and needs drive our roadmap, and we will add it if the demand is there."

For complete coverage of VAR, MSP and CSP acquisitions, visit ChannelE2E Milestones.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.