CRN Exclusive: Polycom Exec On Mitel, The Benefits Of Going Private, And Making The Right Investments For Partners

Going Private

In a surprising turn of events last month, Polycom terminated its Mitel merger and instead opted to be acquired by Siris Capital Group with plans to take Polycom private. The $2 billion acquisition, expected to close in the third quarter of this year, will give the San Jose, Calif.-based video collaboration specialist the "ability to change the rules of the game" to benefit channel partners and spur innovation, said Polycom channel leader Nick Tidd.

"This is a tremendous opportunity for us to make the investments we need to [solve] some of the behavior in the past that was challenging to our partners," said Tidd, vice president of Polycom's Global Partner Organization, in an interview with CRN.

Tidd weighed in on the termination of the Mitel merger, Siris' channel-friendly history and potential technology partnership opportunities stemming from the acquisition.

Before we talk channel, tell us what happened between you and Mitel that took the merger deal off the table.

Siris popped up on the radar screen right at the same time Mitel was announced, so it was not like we were playing one off against the other. It was just evaluating what was the most appropriate return for the shareholders and what was best for the company.

Mitel had the ability to match the Sirus offer, which they decided to decline, which then solidified the Siris offer. The board has approved it and now we wait for regulatory approval to close.

There was a lot of talk about the technology integration and portfolio benefits of a combined Polycom-Mitel. What would you say to partners who were excited about that?

There certainly was an opportunity for additive call control business. There was additive in what Mitel is doing with MiCloud and additives in what they were doing with [the 2015 acquisition of] Mavenir and I was a champion of that.

At the same time, there was some overlap in the technology space. There was overlap in our service provider space. There was some overlap in the Microsoft relationship. When the Siris acquisition was announced there was a sigh of relief in those segments, while others looked at it as, 'Well, I guess I'm going to have to look to find different alternatives to technology.' But the feedback I've heard back from partners has been very positive.

What's are the channel benefits of Polycom becoming a private company?

It gives us the ability to change the rules of the game to not be forced to be confined [financially] within that quarter.

That's going to give us an opportunity to drive change, which our partners are looking for and you can draw parallels across our entire product portfolio around subscription models. Anything in an 'as-a-service' model, means youre deferring top-line revenue into a subscription model. While everybody wants to do that, you're essentially deferring revenue -- meaning your top line performance might not be as bright as it once was.

This is a tremendous opportunity for us to make the investments we need to [solve] some of the behavior in the past that was challenging to our partners.

So the channel doesn't have to worry about Siris implementing a new Polycom leadership team or strategy?

Siris' traditional mode in acquisitions is not to come in and completely destroy the integrity of the go-to-market, nor is it to imbed new leadership teams. What they articulated is, 'We bring an outsider's perspective in looking at trends and analysis and areas where we can grow.'

Will Siris taking Polycom private create a stronger player in the collaboration space?

All of the benefits of going private we will be able to realize. Most notably is many manufacturers have challenges that if you not driving immediate return for an investment in the quarter, it's to the detriment of your stock price and all of the associated activities that go with it.

We've improved ourselves – picking up more market share in North America and we've improved our Gartner Magic Quadrant position as a visionary and leader in the marketplace.

What has Siris been relaying to Polycom about the change to becoming a private company?

This is the single largest acquisition Siris has done to date. They pride themselves on doing one acquisition a year and how they drive that and made it abundantly clear to us at our first all-hands call was that, 'Hey we're in this for the long haul, but at the same time we're accountable to shareholders. So just because you're not publicly traded doesn't mean there's not going to be a focus and emphasis on revenue.' It's not a cakewalk by any in delivering financial results.

What will Siris bring to the table?

If you look at composition of the Siris portfolio, they're all technology companies. If you look at the composition of the folks that will be joining our board – they all have significant channel backgrounds and they recognize the value of the channel. That's an important message to the channel community in that, you're not going to see a radical departure from a channel-friendly strategy. They respect and understand the pathways.

So Siris is sort of a channel-focused equity firm?

If you look at [Siris-owned] Digital River, they're the quarterback behind the Microsoft Ecommerce platform. [Siris owned] PulseSecure, which was a Juniper spin-off – has a very channel-centric technology. So there is a DNA in their community that supports channel initiatives and channel growth.

Their board is also made up of people who have worked in the channel. Michael Seedman, Mary McDowell, Dan Moloney – they all bring channel experience.

Siris' portfolio of companies have similar or adjacent technologies that could fit well into Polycom. Do you see any technology partnerships ahead for Polycom there?

I don't think it's too farfetched to imagine that there will be some complementary and additive technologies to our portfolio.

The objective of every private equity portfolio is to leverage their expertise, which is why they've concentrated on this segment.

So where does Polycom's channel strategy stand now?

As partners look at the investments they make with their vendors and they see their vendors on-boarding partners at their expense, meaning they're losing share, we're not doing that. We're investing and doubling down with existing partners.

Where exactly does the Polycom-Siris deal stand today?

This deal is not closed right now. The deal is tracking to close in the third quarter calendar year time frame.

We've actually had an interesting relationship with Siris over the years. They have looked to acquire us since the [2001] PictureTel acquisition took place and so they have been following us with great respect and watching the flows of the marketplace. So there's no huge rush.