Millitzer says telephone companies and private equity firms are the big investors
(WEB HOST INDUSTRY REVIEW) — Tom Millitzer, president of NCC International and WHIR blogger, spoke about 2011 mergers and acquisitions in his presentation on Monday afternoon at HostingCon 2011.
The presentation had a few technicial glitches, but he spoke about the recent acquisitions in the hosting space.
Millitzer says that last year telephone companies were the big buyers in the space, and says that trend has continued.
“Telephony is the big picture,” Millitzer says. “They have the big money.”
One of the big acquisitions in this vein is the Verizon acquisition of Terremark that closed in the spring. Worth $1.4 billion, the deal supports his message that telephone companies are willing to spend money in hosting. Millitzer says that telephone companies are not innovators.
“They’re not early adopters, they’re waiting for you to do it,” Millitzer says. “That’s why they’re buying companies like Terremark and Savvis.”
Millitzer says that telephone companies wait until the industry is mature, and don’t want to take risks. He says they buy companies that teach them, for example, about cloud.
“They’re not afraid to be at the higher end of the market if they feel comfortable where the market is going,” he says.
The other trend Millitzer spoke about in his session was private equity investments. Obviously, the big one in the space recently, was the Go Daddy deal with Silver Lake, KKR and Technology Crossover Ventures.
The deal, reportedly valued at between $2 and $2.5 billion, is what Millitzer calls a “gamechanger.” Not in the way it changes Go Daddy, he says, but in the way it effects everyone else.
Private equity investments move really fast, he says. The deals happen and close quickly.
“There is one thing for sure about private equity: they are smart money,” Millitzer says.
Private equity, according to Millitzer, is about having skin in the game. Go Daddy founder Bob Parsons had skin in the game, he says.
The other aspect to these investments, he says, is going international. For example, Savvis has expanded its footprint since being acquired.
“It’s time to start picking and choosing where you want to be,” he says.
About Nicole Henderson
Nicole Henderson writes full-time for the Web Host Industry Review where she covers daily news and features online, as well as in print. She has a bachelor of journalism from Ryerson University in Toronto, and has been writing for the WHIR since September 2010. You can find her on Twitter @NicoleHenderson.
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