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Archives > Transaction Case Study 62
SOKOLOFF & COMPANY CASE STUDY:
DATE ANNOUNCED: March 22, 2012
SELLER’S FINANCIAL INFORMATION AND M&A MULTIPLES
Jeff Fox, President and CEO of Convergys said that NEC has a commitment to invest in the business which will benefit customers as well as employees. He further articulated that the sale would strength CVG’s balance sheet and allow them the financial flexibility to invest in the business and return capital to shareholders. Dr. Nobuhiro Endo, President of NEC went on to say that “The acquisition of the IM business will enable NEC to bring even greater value and benefits to the service provider industry.”
Convergys has been improving margins over the last few years while sending signals the IMG business was for sale. Congratulations to Jeff Fox for creating value and orchestrating a graceful exit from the BSS business.
We have just witnessed the coming-of-age of a new BSS/OSS star. The Convergys unit will be integrated into Netcracker Technology Corporation, the OSS business which NEC acquired in 2008 for $300 million. Andrew Feinberg, who in 1998 became CEO of the business his father co-founded in 1993, continues to fill the role under NEC. Andrew has successfully led what was once an entrepreneurial start-up to become a vibrant division of a $40 billion multi-national business.
While total numbers are not disclosed, we believe that, adding the CVG unit to the original Netcracker business, which was itself combined with other NEC telecom related assets, makes Netcracker the new #2 in the BSS/OSS space with about $1 billion in total revenue, inching out Comverse Technology. Thus CMVT is the new #3, generating $921 million from its BSS/OSS units in 2011. #1 in the BSS/OSS space remains $3.2 billion leader, Amdocs Limited (DOX).
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