Despite the recession, some managed service providers continue to attract investment dollars. One example: Zayo Group, which specializes in fiber-based network services and managed services, says it has raised $128 million in Series B funding. Here’s a bit more about the company’s financial performance, along with some tips on how you can track where IT investment dollars are flowing.
Within the Zayo press release, the Louisville, Colo.-based company reveals some key company metrics:
- Zayo’s revenue is approximately $200 million and its EBITDA (earnings before interest, taxes, depreciation and amortization) is approximately $60 million.
- Zayo is net income positive and, beginning in 2Q09, is expected to be free cash flow positive.
- Key investors include Morgan Stanley Alternative Investment Partners, Charlesbank Capital Partners, Battery Ventures, Centennial Ventures, Columbia Capital, M/C Venture Partners and Oak Investment Partners.
Zayo has multiple business focuses, but you can find details about its managed services effort here.
Despite Zayo’s new funding, the overall IT investment market remains soft. CompTIA (the Computing Technology Industry Association) recently noted that IPOs (initial public offerings) and merger and acquisition activity dropped sharply in 2008 compared to 2007.
To track ongoing financial and M&A trends, check out:
- Private Equity Hub, a great web site that can help you to see where investors are placing their financial invests. That’s where I first spotted the Zayo news.
- Our own MSPmentor M&A Tracker, which documents mergers and acquisitions across the managed services sector.
Let’s Make A (Smaller) Deal
Meanwhile, I sense that most MSPmentor readers are looking for much more basic financial advice and guidance — including tips for working with local credit unions. Stay tuned. We’re working on some special content in that area.
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Posted In: Finance
Tags: Battery Ventures | Centennial Ventures | Charlesbank Capital Partners | Columbia Capital | CompTIA | Computing Technology Industry Association | M/C Venture Partners | Managed Services Investments | Managed Services Private Equity | Morgan Stanley AIP | Morgan Stanley Alternative Investment Partners | Oak Investment Partners
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I spent the better part of a decade working in finance Joe. This is an area I know like the back of my hand. Unsecured financing for the small business is all but dead right now. You might as well forget about a business line of credit unless you mortgage your house. Business credit cards have also become very difficult to obtain these days. Banks are cancelling existing credit lines and credit cards because of the fear of lending to a small business. The SBA, once a hub for small business finance, was neutered under the previous administration. Obama has promised to give it some legs again, but who knows when that will happen. My advice is to be extra mindful of your credit in these times. It could be the difference between obtaining financing or not. Lenders are tightening credit standards and will only lend to A+ clients right now.
Paul Barnett
Marketing Director
Virtual Administrator
Paul: Great to have your voice providing some guidance to readers.
I think entrepreneurs have to ask themselves:
1. Am I building a business to finance my expensive car and my expensive house?
2. Or have I managed my home and personal finances reasonably well so that I can focus on building a business that becomes my core asset?
Very well said Joe. I couldn’t agree more.
One point of clarification, just so readers don’t shoot me: There’s nothing wrong with owning an expensive house or expensive cars. I love my expensive toys as much as the next guy.
But there IS something wrong with trying to own those items if (A) you can’t really afford them (B) you’re zapping your business of cash flow in order to fund personal pursuits you can’t really afford either.
I can’t remember the name of the business coach who told me this, but he said “own your car and house, don’t let them own you.” I think that sums it up perfectly.
Raising money in this environment is extremely difficult. The ability to raise equity shows that the investment community believes that the demand for bandwidth is still strong, despite the economy. One of the reasons Charles Bank and Morgan Stanley invested in Zayo is that the operational finance function is very strong … See my blog post http://businesstoolsblog.com/wp-admin/post.php?action=edit&post=110
Stay tuned to Dan Caruso – Zayo CEO’s blog for more information on how we are spending the $128M http://www.bearonbusiness.com.
Sandi: Thanks for giving us some deeper perspectives. Do you mind me asking who you represent? (I already know… but our readers may like to know…)
Hi Joe,
I’m the Chief of Staff for Zayo Group. You have a great blog.
Sandi
Sandi: Congrats on the funding and thanks for the kind words. MSPmentor is part of a bigger media initiative from Nine Lives Media Inc.. Busy but fun times. Keep us posted as Zayo launches new managed services initiatives.
will do