• Cloud Capabilities Attractive to All Markets: The deal is the latest example of the telecommunications industry turning to cloud providers in an effort to boost multiples and broaden capabilities. Recent high-profile such deals include Rogers Communications’ October acquisition of Pivot Data Centres, Time Warner Cable’s 2011 acquisition of Navisite and Verizon’s 2011 acquisition of Terremark.
• Buying an Entry into the SMB Space: Currently, the Small and Medium Business market is a highly fragmented market. By pairing Cbeyond’s services offerings with Birch’s existing telecommunications accounts, the combined company will present an attractive end-to-end services suite covering every stage of the business lifestyle.
• Using Resources and Experience to Execute Vision: Cbeyond successfully put in place much of the infrastructure necessary to provide enterprise-class cloud and connectivity resources to the lower SMB market niche – but it did not have the resources to completely execute on this strategy. Together with Birch’s experience controlling costs and scaling its own business, this foundation will enable the combined company to successfully make Cbeyond’s original vision a reality.

For more information, read the press release here.

martinwolf was not the advisor in this transaction.