Replaces Rich McBee as head of the UCaaS vendor
Business communications company Mitel is switching leaders, with former Polycom CEO Mary McDowell taking over as president and CEO and replacing Rich McBee.
The Lowdown: McDowell comes to Mitel more than a year after leaving Polycom, which she took over in September 2016 and steered through a move to go private and then a sale to rival Plantronics in July 2018.
The Details: McDowell takes over a company with more than 70 million business users in more than 100 countries. The company also has more than 4.7 million cloud users, more than $1.3 billion in revenue, and more than 1,600 patents. In a report in February, Synergy Research Group analysts noted that Mitel was the top vendor in the Unified Communications-as-a-Service (UCaaS) space for small businesses and was among the leaders for the midmarket and enterprises.
It was bought in April 2018 for $2 billion by Searchlight Capital Partners. McDowell noted in an interview with TechTarget that eventually Searchlight – like any private equity firm – will look to sell Mitel, but added that “that is very far down the road.”
The Impact: The change in CEOs at Mitel is illustrative of a business communications industry that has seen its share of changes and consolidation in recent years. Most recently, that has included Avaya’s ongoing efforts to set a course for its future. The company has sought a buyer – either another vendor or a capital venture firm – but this month struck a partnership with competitor RingCentral, which will now be the exclusive provider of UCaaS solutions for Avaya. RingCentral also will buy a 6% stake in Avaya via a $125 million investment and provide Avaya with another $375 million for future payments and licensing rights.
At the same time, Mitel in August reportedly had considered merging with Avaya to create a $5 billion powerhouse in the business communications space.
Background: Mitel’s interest in Avaya wasn’t surprising. During his eight years running Mitel, McBee led an aggressive acquisition push, reorganizing the company’s business units and revamping its executive ranks as part of a larger initiative to adapt to a rapidly evolving business communications space that was becoming much more cloud-centric. Under McBee, Mitel bought such companies as Aastra Technologies and Mavenir and in the process became a $1 billion company, and in 2017 finally bagged ShoreTel – which Mitel had pursued for three years – for $530 million.
Mitel in 2016 also bid $2 billion to buy Polycom, but eventually dropped the offer after a last-minute counter-proposal by private equity firm Triangle Private Holdings II, which sold Polycom to Plantronics. The combined company rebranded as Poly earlier this year.
The Buzz: “Mitel has a storied history of innovation, a trusted brand, and a unique ability to meet customers wherever they are on their path to the cloud,” McDowell said. “I’m excited about the opportunities that lie ahead and eager to work closely with Mitel’s experienced team and network of partners to continue delivering solutions that make communications and collaboration more seamless for our customers.”
“I’m extremely proud of what the Mitel team accomplished in our time together through a rare combination of passion, dedication, and innovation,” McBee said. “Mitel is well-positioned to accelerate the market transition to cloud and Mary has the deep technology expertise needed to lead the company. The future is bright for Mitel, and I look forward to watching its continued success.”
“We thank Rich for his leadership at Mitel. He has played a crucial role in transforming Mitel, and we wish him the best in his future endeavors. We are committed to Mitel’s success and look forward to partnering with Mary to continue the company’s strategy of providing a clear and seamless path for every business to move to the cloud,” said Andrew Frey, Mitel board member and partner at Searchlight Capital Partners. “Mary’s proven operating experience and success in guiding technology companies through market transitions make her an ideal choice to guide Mitel in this next chapter.”