Vonage acquires cloud-based contact center startup NewVoiceMedia for $350M in cash

More consolidation is afoot in the world of cloud-based voice services. Today, Vonage — once a VoIP pioneer that today offers cloud-based unified communications and other IP services in the business market — announced that it would acquire NewVoiceMedia, a UK startup that builds cloud-based contact center solutions, for $350 million in cash.

Vonage says the price represents 3.8 times NewVoiceMedia’s projected 2019 revenue. But it isn’t a stellar exit for the startup, which has been around since 1998 and was last valued at upwards of $311 million, according to Pitchbook data. That was over two years ago, and we’d heard the valuation was actually closer to $500 million at the time. Its investors included Bessemer Venture Partners, Technology Crossover Ventures, Salesforce Ventures and more.

On the other hand, the deal will help Vonage increase the services it provides, and thus the margins it makes, in a wider suite of value-added IP services — which today include office phone systems, marketing automation and an existing call center solution, as well as MPLS and other IP services. Specifically, it gives it the platform to integrate also more deeply with other software providers like Salesforce, an important part of how Vonage sells its services to would be customers.

“We are thrilled to announce the acquisition of NewVoiceMedia, which represents a major step forward in the realization of our strategic vision to deliver a differentiated, fully-programmable communications solution that drives more meaningful customer interactions and better outcomes for businesses,” said Vonage CEO Alan Masarek, in a statement. “This acquisition accelerates Vonage’s growth strategy and leadership position in cloud communications, strengthens our presence with global mid-market and enterprise clients, and deepens our integrations and key go-to-market relationships with CRM providers, especially Salesforce.com.”

Vonage is today a $3.2 billion company traded publicly on the NYSE, and its stock is up slightly in trading today.

Vonage claims NewVoiceMedia is the largest privately-owned, pure-play, cloud contact center company globally, with some 700 customers mostly in the mid- to large-enterprise range, including Adobe, Siemens, Time Inc., FundingCircle, and Rapid7.

Dennis Fois, the CEO of NewVoiceMedia, will stay on and continue to lead NewVoiceMedia business, which has 400 employees today. “Vonage and NewVoiceMedia share a powerful vision to serve businesses with cloud communications that connect employees and enable personalized conversations with their customers and prospects,” Fois said in a statement. “Together, we can help businesses create richer experiences through a state-of-the-art, global, programmable cloud communication platform.”

Vonage said it would finance this deal through a combination of existing revolver capacity, cash on hand and cash on the balance sheet of NewVoiceMedia. The transaction is expected to close in the fourth quarter of 2018, subject to standard regulatory review and customary closing conditions.