In late July, Zoom announced it was acquiring cloud contact center company Five9. Now, however, that deal is off.
The acquisition would have been an all-stock deal valued at around $14.7 billion, and it seems that Five9 shareholders chose to reject it after that stock valuation dropped in the months since the announcement.
It's just another bump in the road for Zoom, which has risen to massive success over the past few years thanks to a global pandemic that's dramatically boosted everyone's interest in video conferencing software.
Zoom's Plans to Expand
Zoom needs aggressive expansion in order to compete with the biggest consumer video chat options like Google Meet, but this deal would have also helped Zoom expand further into the small business space. Five9's focus, cloud contact centers, would have been a natural fit for Zoom to bundle with its video conferencing offering.
In fact, that plan is exactly what Zoom CEO Eric Yuan confirmed in his blog post announcing the reversal of Zoom's Five9 acquisition, saying this:
“We have also looked to acquire capabilities through M&A. Five9 was one such opportunity, as it presented an attractive means to bring to our customers an integrated contact center offering. That said, it was in no way foundational to the success of our platform nor was it the only way for us to offer our customers a compelling contact center solution.”
So what went wrong? Well, it turns out Zoom's sky-high growth over the past few years makes it a less than stable company when it comes to huge stock-only deals.
Zoom's Stock Dropped
The Five9 deal was announced in late July, and as of the end of September, Zoom's stock had dropped by over 25%. And it's an all-stock deal, so there aren't any extra premiums to keep Five9's shareholders happy. If the deal had gone through today, those shareholders would have seen the value of what they earned drop by a quarter.
It's easy come, easy go for Zoom, however: The company's value when it IPO'd in 2019 was $9.2 billion, which is far less than just this one deal. Whatever comes their way, the company will be just fine.
Video Conferencing for Your Business
Should you still check out what Zoom has to offer small businesses? Yes, as long as you don't have any plans to adapt a cloud contact center any time soon. And honestly, if you give Zoom a few more months, they might easily find yet another path towards acqui-hiring their way into contact centers.
In the meantime, Zoom is a top conferencing service, with the perks that any hybrid or fully remote workplace demands, particularly if they're new to remote work: It's easy to use, has a great free plan, installs fast, and has a lot of features. Granted, we'd suggest Zoho Meeting and GoToMeeting ahead of Zoom — we've taken the time to rank the best business conferencing services.
You may also want to check out our guides to the other software options your business could benefit from when operating remotely — remote access software and password managers are the biggest ones to know. Should Zoom ever expand into those categories, we'll let you know if they're worth considering as well.