M&A, venture funding in IP communications heating up

After a bone dry first quarter, it appears that the market for mergers and acquisitions and venture capital investment in the IP communications world is ramping up again. After BroadSoft formally announced its purchase of Sylantro in late December 2008, there were only two funding announcements and no significant acquisitions around IP communications until Acme Packet announced its purchase of Covergence for $23 million April 30.

Given the drastic economic downturn, it's not altogether surprising that investors and companies looking for acquisitions sat the first quarter out. But now that "green shoots" are beginning to appear and experts are forecasting a gradual economic turnaround, it looks like it's open season again on the M&A and VC front--there have been four acquisitions and three funding announcements since Acme bought Covergence six weeks ago.

Just this week, jaxtr was bought by SabSe Technologies and Natural Convergence announced it was buying NewStep Networks for its FMC technology. In May Avaya purchased contact center software maker Agile and Voxeo bought IMified for its IM API.

On the funding front, fring raised a Series C round, hosted VoIP play Telesphere raised $15 million, and Xcast Labs raised $2.7M, with all deals announced after May 1.

Garrett Smith, at Smith on VoIP, sees the acquisition trend continuing in mobile VoIP as companies that weathered the recession well look for bargain prices on their less fortunate peers. Start-ups or smaller companies with strong SIP technology or a compelling UC story could also be acquisition targets as the year goes on.

Rumors circulated in February that 8x8 might be a likely buyer, as the profitable company stockpiled more than $16 million without any other clear purpose. Voxeo, whose IMified buy was its third in 12 months, also could purchase another company with a strong tech set. The big tech companies with cash stockpiles, such as Cisco, Apple and Microsoft, could always poach an IP communications company, but it's difficult to see a clear place they'd make an investment to fit their current voice product lines.

Which companies do you think will be active in M&A in the second half of 2009? Is there a company you think will be targeted for acquisition? Shoot me an email or a tweet and we can discuss.

- Pete
@fiercevoip