Why did Avaya go private in 2007?

[AvayaRed]

Hello all. I was always wondering, why did Avaya decide to go private in 2007? I was reading some old news and posts on this forum and Avaya was trying to get bought out by a private equity (which did happen), Cisco, or Nortel (crazy that Avaya ended up buying Nortel). For a company of that size that was a leader in the Voice and Contact Center realm in 2007 to go private was very shocking to me and to this day, it still does not add up. Was curious if anyone had any ideas.

 

[kyle555]

My understanding is - and I guess this is true of most companies that do it - is that you want to do something more long term than quarterly earnings calls justify.

 

[IPOthermia]

As I recall Platinum Equity paid 8 Billion and bought all AVAYA stock. Then made the company private and billed the cost of going private back to AVAYA. Then they spent 900 million and bought Nortel and all of its legacy pension obligations. Hence the recent bankruptcy. It was a dumb idea. Basically it has killed AVAYA. RingCentral now has 10 times the Market Capitalization of AVAYA it that tells you anything. I see all these people on linked in who work for AVAYA and its like they live in some alternate universe because I never see AVAYA phones anymore. Not sure who their customers are.

 

[kyle555]

Megacorps. People who need a platform with a 20 year track record.

Technology gets cheaper and simpler over time and products get replaced. There's not much work for MS Exchange server admins anymore either.

 

[AvayaRed]

@ipotermia

To be fair, Avaya had their own pension obligations and union that they had to fund but I agree with you that it hurt them supporting 2 completely different PBX technologies with no plans to integrate them together to please both customers. As for RingCentral, because of their recurring revenue model and cloud first technologies, the stock market loves those types of companies (Avaya Cloud Office by RingCentral is a amazing product and I wish Avaya owned the full intellectual property).

At around that time in 2007-2009, I thought Avaya was on a great path because their contact center was so far ahead of Nortel and Cisco and they were making a push to virtualize their applications. Is that how you guys also read it in around that time? I wish they made the transition to cloud sooner than they did or acquired RingCentral early on to make that the migration path for the IP Office to move to the cloud. If that happened, they would have been in control of the UC world because of Avaya's massive customer base.