In the months since IP gear-maker GENBAND Inc. won bankrupt Nortel Networks’ Carrier VoIP and Solutions (CVAS) unit at auction, details on integration plans, revenue growth and other strategies remained scant. The $182 million deal was finalized last week, and GENBAND President and CEO Charles Vogt talked with Kelly Teal, business & regulatory editor of VON/xchange, about GENBAND’s plans for revenue growth and an initial public offering.
VON/xchange: Tell me about GENBAND’s plans for an IPO.
Charles Vogt: We restructured our equity holdings following the [Nortel] acquisition. JPMorgan becomes a majority shareholder via One Equity Partners (OEP), which is the private equity arm of JPMorgan. We don’t have anyone that’s pushing me or driving me to become a public company. I think from our standpoint, we’re looking at the pros and cons of being a public company. When we look at the pros, if we continue to perform like we have, we think we will be rewarded with public currency that will give us more options to continue to grow inorganically. We think the branding that comes with being a public company is much stronger. We think it gives our customers and partners much more visibility and insight into our business than they have today.
That said, being a private company has its advantages. We’re not spending the money in having to adhere to the strict [Sarbanes-Oxley] guidelines and other compliance requirements that exist with a public company. And at some point our shareholders are going to want some form of liquidity, whether it’s in the form of GENBAND being acquired or from a public currency. Our preference would be to continue as a standalone business. We think there’s a lot more that we can achieve. Over the last six years, we’ve gone from $2 million in sales and 80 employees, and five acquisitions later we’re topping $800 million in sales, with 2,200 employees. We think there’s a lot more for us to do. We now have the scale to do it and we have really no interest in selling the company. So when you think about, how do you get shareholders who have invested in GENBAND for 10 years, liquid over time? The best scenario for us, and them probably, is to take the company public.
V/x: What’s the timeframe on that?
CV: I’d like to think we’ll be ready this time next year.
V/X: Talk about integration challenges and how you plan to address them, especially with some Wall Street analysts’ concerns that problems will come of Nortel CVAS being about five times bigger than GENBAND.
