Avaya is one of the most talked-about companies in the communications market. Not only does it offer some of the most reliable and innovative unified communications and contact centre solutions, but the rumour mill behind this business seems to be constantly churning too.
Over the last few months, I've had the unique opportunity to listen to countless conversations while connecting with industry leaders and visiting UC events. From what I've heard, it's growing increasingly clear that Avaya may well be beyond economical repair. Despite the company's continued growth in the cloud space and strong revenues, a new home may be necessary for the organisation to continue holding on to its position in the UC sector.
In my opinion, Avaya is the Ford of the UC industry. The demise of such an iconic brand is deeply disturbing to me. The significant debt that the company continues to carry with it means that it's difficult for the brand to accelerate at the pace that's necessary for the current marketplace.
As Jack Welch, former CEO and Chairman of General Electric, once said:
"If the rate of change on the outside exceeds the rate of change on the inside, the end is near"
Keeping Up with Current Demands
Avaya's ability to recover since its Chapter 11 bankruptcy has been impressive to say the least. In January last year, the company released a huge chunk of it's 6 billion debt, and managed to move on from Chapter 11 completely, listing on the public market soon after it acquired its own cloud contact centre business. For a while, it seemed as though Avaya were back in action, bigger and better than ever.
However, less than 18 months later new rumours began to emerge about Avaya potentially considering offers for an acquisition. With financial leaders like Bloomberg and the Wall Street Journal echoing this sentiment, it became difficult to ignore the idea that Avaya could officially be "up for sale."
While I'm not a financial expert, I don't think that any new home for Avaya is going to be perfect from day one. There's a good chance that the new owner will be looking for a way to cut costs as soon as they embrace Avaya. However, the strategy that the acquiring business will consider when taking on Avaya all depends on which company is doing the buying. On one end of the scale, we have legacy powerhouses like Mitel. On the other hand, there's RingCentral - a UCaaS Magic Quadrant leader, benefiting from astronomical growth and a fully established cloud platform.
What Happens If an Acquisition Goes Through?
In my perspective, Mitel purchasing Avaya may not be a good idea. At this time, Mitel is still working on its cloud strategy, and it's in the process of reshaping its organisation after the acquisition of ShoreTel. When two huge companies like Avaya and Mitel come together, there's a significant likelihood that we'll see massive layoffs and significant integration challenges.
So, will Avaya consider an acquisition, knowing that it may cause additional problems for its communications family? Or will the company remain independent? If Avaya chooses the latter option, then will they stay on the public stock market or go private? Will they consider selling off a portion of their business to keep the lights on? At the moment, the Aura Contact Centre has the highest value for Avaya, which means it could be sold off for some significant cash. But what happens to Avaya if the business starts chopping off chunks of what makes it special?
