Masergy's Mind Is on M&AMasergy's Mind Is on M&A

The managed services provider Masergy Communications, which acquired the cloud specialist Broadcore last year, wants to pursue more M&A, according to Masergy CEO Chris MacFarland. But you shouldn't expect a shopping spree.

MacFarland told us he admires how quickly and effectively operators like Zayo Group Inc. (NYSE: ZAYO) have built network scale through acquisitions. However, part of the reason Masergy Communications Inc. won't make like Zayo in terms of deal frequency is that many service providers also have M&A on their minds.

"When you've got exciting markets that you're in, there will be competition for deals," he says. "We've been actively pursuing acquisitions for the last two years, but we've only done one deal. That was for Broadcore."

Broadcore was targeted specifically because Masergy was looking for a leg up in the cloud services game. That highlights another reason it won't go on a buying binge: It is looking to stay within a handful of service sectors important to its customers, such as cloud, security, and SIP trunking. (See: Masergy Acquires Broadcare for Cloud Comm.)

This week, Masergy said it is adding cloud service providers to its Masergy Marketplace, which allows its on-net partners to extend virtual connections for their customers. (See: Masergy Marketplace Adds Cloud Providers.).

Masergy also is continuing to roll out SIP trunking, a service MacFarland says may be at a tipping point. "That is a market just at the beginning of mass adoption. There are so many enterprises out there with PBXes, the majority of which are connected to the PSTN, and that's a huge opportunity."

— Dan O'Shea, Managing Editor, Light Reading