Is Mitel Simply Building a Bigger IPO?

I just got off the phone with our good friend Ron Gruia who called to chat about Mitel acquiring Inter-Tel. (Ron is with analyst firm Frost & Sullivan, and he writes a column for our IMS magazine.)

 

Essentially Ron is wondering if one of the (as yet) unannounced reasons behind this merge is simply that Mitel wanted to increase the valuation of their company, and secure a bigger piece of the Unified Communications pie  before a long-planned IPO takes place.

Adding Inter-Tel into the mix, complete with their robust channel and managed services business as well as the ability to increase their total geographic coverage (while there is some overlap, surprisingly the two companies seem to have a lot of area ‘to themselves’ so to speak) will do more than simply lift the combined revenues to around $800 million. The managed services business adds to the “recurring” side of the ledger and that’s often easier to buy than it is to build.

 

I for one thought that maybe there were some hidden “issues,” which were leading Mitel to continuously delay their IPO, but I certainly have no real insight into that. Ron told me that Mitel Chairman Terry Matthews told a group of analysts recently, that flat-out, the market was not at its most receptive for an IPO.

 

If Terry Matthews and his advisors at Merrill Lynch and RBC feel the market was soft, I am in no position to argue with them. Terry is a smart man, and his success in this business is really unequaled. Ron reminded me that if successful, Terry Matthews might just be the first man to take the same company public… two times!

 

What are your thoughts? Do you think that Mitel is simply gearing up for a mega-IPO somewhere down the line?

 

Feel free to leave a comment below.