What the Calero Software & MDSL Merger Means

calero and mdsl

What the Calero Software & MDSL Merger Means

Earlier this week, Calero Software and MDSL, two high-growth Telecom Expense Management (TEM) software providers, announced a merger that disrupts the global technology management space. The combination of two industry-leading TEM, market data management, and Managed Mobility Services (MMS) platforms will – at a minimum – make it possible for enterprise clients to more easily and effectively perform mission-critical expense management tasks across a wider variety of communications technologies.

The benefits of this merger, however, will likely not stop there. Beyond combining two leading solutions, this move makes it possible for both organizations to unify product development and customer success innovation investments in a manner that makes it possible to accelerate the growth of more advanced technology management capabilities.

“Today’s technology management teams are becoming more integral than ever to driving overall enterprise success,” said AOTMP® Executive Vice President Timothy C. Colwell. “And that means extending traditional practices beyond the scope of telecom, mobility, and IT. As newer technologies like the Internet of Things (IoT), Software-as-a-Service (SaaS) applications, and cloud grow more ubiquitous in the workplace, organizations are increasingly finding value in the simplicity of managing expenses from within a single platform. This merger highlights the value of continuous innovation and a commitment to business expansion that all vendors must prioritize if they hope to ensure future success.”

Depth of Insight

For Calero and MDSL, this bold move positions the merged provider as a global leader and – more importantly – pushes the entire technology management industry’s innovation initiatives forward.

“During the past 25 years, both MDSL and Calero have focused on technology innovation and automation, which our clients have embraced and appreciated,” said MDSL CEO Charles Layne. “Calero and MDSL will continue to support all existing customer technology platforms and will maintain the outstanding customer service levels customers have come to expect from both companies, even as we add new capabilities and insights to our solution set. We believe that bringing together these two forward-thinking, customer-fixated organizations will drive bolder innovations, accelerated timelines, and more value for companies in managing technology expenses.”

While this merger has obvious benefits for the businesses involved, it also delivers insight into growing industry pain points and highlights a need for service provider solutions that feature comprehensive functionalities to manage enterprise technology in a holistic fashion. The traditional approach of managing technology expenses in silos is making it increasingly difficult for enterprises to identify improvement opportunities and implement optimizations.

“In recent years, the TEM space has witnessed too many mergers and acquisitions to count,” said Colwell. “This move sends a clear message: that specialized vendors are rapidly becoming a thing of the past. Today’s enterprises demand a single technology management partner that satisfies all their needs, checks off all the requisite boxes, and offers insight that considers a wide range of technologies from the context of their unique business requirements.”

What Enterprises Can Expect

The Calero-MDSL combination will better ensure clients of both companies can manage their highly complex, recurring expenses across fixed-line and mobile communications as well as market data subscriptions, IoT, SaaS, and cloud infrastructure operations.

Outside these organizations, however, this merger signifies a shift in the technology management ecosystem. Enterprise customers will increasingly migrate toward expense management providers that feature robust service offerings, expansive knowledge sets, and an innovation-obsessed culture.

This transaction will undoubtedly inspire future merger and acquisition activity in the short-term with the goal of creating long-term prosperity and growth. Organizations will need to revisit product roadmaps and business strategies to create new products and services, satisfy client demands to manage advanced technologies, and simplify existing offerings to more effectively address enterprise technology management gaps.

For current customers and prospects of these enterprises, this move should be carefully considered in the context of unique business objectives and how a combination impacts its ongoing ability to satisfy TEM needs. Large-scale moves like this one are sure to create integration challenges where merged technologies and business processes are concerned. Account management should also be discussed as support team structures evolve and result in changes to provider responsiveness.

It’s also important to understand how a combined Calero-MDSL entity’s product roadmap and delivery strategies are affected. Any potential partnership decision should include extensive discussions about the company’s future vision in a manner that enables enterprises to take advantage of performance optimization opportunities and address all relevant concerns.

To finalize this merger, Oak Hill Capital will make a significant investment to join Riverside Partners (Calero’s existing financial sponsor) as the lead investors in a growth re-capitalization of Calero and subsequent funding of the combination with MDSL. Sumeru Equity Partners (“SEP”), MDSL’s financial backer, will also continue as a significant investor in the combined business. The closing of the merger is expected in late Q4 2019 or early Q1 2020 and remains subject to customary regulatory and other approvals. Financial terms of the transactions were not disclosed.

Calero Software was founded in 2013 and is headquartered in Rochester, New York. MDSL was founded in 1995 and is headquartered in Phoenix, Arizona.