Deals of the Year: Familiar faces Mitel, prairieFyre tie the knot

Mark Brownlee
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For about a decade, telecom giant Mitel went back and forth with software firm prairieFyre on a potential deal. But the two local companies couldn’t get something done.

Mitel's Richard McBee. (Supplied photo)

That changed in June of this year, when Mitel announced it was entering the growing contact centre market with the $20-million purchase of prairieFyre.

PrairieFyre had received inquiries from a number of companies interested in making a deal over those eight years, said the company’s former vice-president of business development and marketing, Todd Simons. None of them were as serious as Mitel, though.

“Things came together really this year as a strategic priority for Mitel,” said Ron Wellard, executive vice-president and general manager of Mitel’s communications solutions division.

“In the past we had some discussions, but the circumstances weren’t necessarily there on both sides that we saw that the deal was the right thing to do.”

The two companies were well-acquainted with one another.

Mitel accounted, at the time of the purchase in June, for about 95 per cent of prairieFyre’s revenues. The two firms were also part of the relatively small crowd that makes up the Ottawa business community.

That’s one of the reasons why, once the two sides could agree on a dollar figure, all those years of talks between the two sides finally came to fruition.

“You build those relationships over the years and a sense of trust with your partners and that’s really what business is all about: building a business with people you trust and have good relationships with,” said Mr. Simons.

What changed?

Part of it, said Mr. Simons, was that prairieFyre’s primary shareholder was looking for an exit. Once that element came into play, it became easier for the two sides to agree on a price that was fair to both.

The fact that Mitel was willing to pay entirely in cash also helped move the deal along, added Mr. Wellard.

The two companies are a good fit with one another, said Mr. Simons, and not just because they’re both based in Ottawa.

Mitel wasn’t previously in the contact centre space in which prairieFyre specializes, meaning there was little overlap between the two.

PrairieFyre also devoted 80 per cent of its budget to research and development, said Mr. Simons, meaning it was working in areas in which Mitel had less of a presence.

Despite the natural fit between the two companies, though, Mr. Simons said there was no “aha” moment that convinced him the deal was going to happen.

“I think right up until the last moment there was a lot of tension and there was a lot of back and forth,” said Mr. Simons, who has since transferred over to Mitel as its head of product marketing.

“I can tell you the executive team at prairieFyre was really burning the midnight oil to address any of the concerns that Mitel had about the acquisition happening. I’m sure it was the exact same thing over on the Mitel side of things too.”

So far, Mr. Simons said, the deal has worked out well for both sides.

He acknowledged that concerns about his position being redundant made for a “little trepidation” for him when the deal was first announced.

“Personally it was a couple of weeks of uncertainty, but they put me back in pretty fast so I didn’t have too much time to think about it,” he said.

Mr. Wellard said it was nice to see a local company grow enough to gain Mitel’s interest.

“It’s good to see that we were able to make this happen with a local company as opposed to having to go farther afield,” he said.

Sidebar: Mitel in buying mode

Mitel wasn’t finished with acquisitions once the prairieFyre deal was announced. In November, the company announced it was purchasing Concord, Ont.-based Aastra Technologies for close to $400 million to help it expand the local company’s global sales reach.

Richard McBee, Mitel’s president and CEO, said observers can expect more of these acquisitions in the future – as long as they present a good deal for the company.

“We refuse to overpay for an asset,” he said in an interview immediately following the Aastra acquisition. “So we’ll establish what we think is a fair value for the asset and if we can get in that price range, then we’ll do a deal, and if we can’t, we’ll pass.”

Organizations: Mitel, Aastra Technologies

Geographic location: Ottawa, Concord

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Recent comments

    December 30, 2013 - 13:07

    Mitel should look at entering into a new market to shelf-off the new Contact Centre one would think the HR market. This would be great for the HR Informatics.