What happened to CosmoCom?

There was recently some very interesting news from our industry: CosmoCom, a vendor of IP contact center solutions, has been sold for 20 million US dollars. I read the reports again because I could not believe the sum: 20 million dollars! CosmoCom themselves reported that they were able to secure over 64 million USD in five financing rounds by 2000. It is even possible that they raised more money after that and now they’ve been sold for only twenty million to Syntellect, which is wholly owned by Enghouse. This sale for just 20 million dollars represents a big loss in shareholder value when measured against the amount of capital invested in the company. Ari Sonesh, the CosmoCom founder and CEO, has already left the company. Maybe something went seriously wrong?

According to the press information released by Syntellect, CosmoCom’s revenue for the fiscal year 2010 was approximately 17.6 million USD which means the selling price is just 1.15 times that amount. Information found in the internet, shows their turnover in 2009 was still 30 million dollars. To me, the interesting questions are: what happened to the money they gathered from their investors and why did their revenue collapse like that?

As they didn’t publish this information, you can only guess their outgoing costs. According to sources from the web, CosmoCom has 200 employees and with 17.6 million dollars turnover in 2010, this could easily mean they’re making major losses.

After a takeover, the first thing the purchasing company usually does is look for synergies. This often leads to them downsizing operations of the company purchased. This is particularly the case if their own portfolio overlaps with the acquired company and that company has previously made a loss.

So what are the CosmoCom customers going to do now? Maybe you know? I’d be interested to hear from you.

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