Despite my best analysis, Avaya's board decided to go the private equity route through an $8.2 billion
buyout by TPG Capital and Silver Lake. This is not first PE injection that Avaya ever had. Warburg Pincus invested $400 million in 2000, as preferred shares and a warrant to purchase 3.6% of common shares after the spinout by Lucent.
What does this mean for customers?
Nothing. Avaya customers, for the most part, made their purchase decisions years and years ago, and have managed to maintain their equipment and investments in Avaya equipment. One thing customers may miss is the market signals (financial reporting) as a method to determine whether Avaya is doing things right or not.
What should I say?
Avaya sales people – This reinforces the path that Lou D'Ambrosio has set for the company. Avaya will have the financial resources and discipline to invest for the long haul. We will be able to acquire other companies and integrate them as the marketplace restructures the technologies you use to communicate and collaborate.
All other sales people – it doesn't help Avaya with new products, does it? This is about the management team getting an early Christmas present, and does nothing for customers.
Nortel sales people – Avaya's buyout is confirmation of the need for enterprise-service provider synergies to share technologies across the enterprise-service provider boundaries, a connection that Avaya lost when they were spun out of Lucent. It also confirms that this industry is going to consolidate, and only the strong will survive. We will survive and will lead the industry transformation. Stay tuned, Mike Z hasn't played all his cards yet.