RingCentral seeks adviser guidance as it receives acquisition interest

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RingCentral, a cloud-based provider focused on serving business customers, has sought the help of an adviser after it received inquiries to purchase the company.

Citing two people familiar with the situation, Bloomberg reported potential bidders on RingCentral could include a mix of technology-focused private equity firms and other cloud-based software providers.

However, the two sources, who asked not to be identified because the details about the company’s plans are not public, said RingCentral may not pursue a sale at all.

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RingCentral would not provide a comment to Bloomberg.

The idea of a private equity firm purchasing a cloud-based company like RingCentral is not off base. Over the past year, private equity firms have spent nearly $20 billion on acquiring technology-related companies, according to data collected by Bloomberg.

Rackspace Hosting was purchased by Apollo Global Management last year. Earlier, Oak Hill Capital acquired FirstLight Fiber, a competitive provider that has found a growing niche in New York and Northern New England. Since it acquired FirstLight, the VC firm has purchased a number of other regional fiber-based service providers, including Oxford and Sovernet, and combined their operations with FirstLight.

Venture capitalist firms have been just as active in the cloud and related IP-based voice space. Siris Capital purchased Polycom for $2 billion last year, for example. 

The company reported $119 million in second-quarter 2017 revenue, up 30% year over year. However, RingCentral has suffered losses over the past three years. 

Kenneth Goldman, the former CFO of Yahoo!, joined Ring Central’s board in June.

What’s compelling about RingCentral is it enables businesses to transition to the cloud. The service allows businesses to use their existing IP phones, or rent them from RingCentral at affordable prices. Business can also connect desktops and smartphones to the service with free RingCentral applications.

RingCentral gets the majority of its revenue from selling subscriptions, including those it sells through third-party resellers, including AT&T.

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