Earlier this month, Bloomberg broke the news that Genesys plans to become an initial public offering (IPO).
If this is the case, Genesys will pivot from a private to a public company.
Bloomberg suggested that the CCaaS provider is working with several partners – including Goldman Sachs, Citigroup, and JPMorgan Chase & Co. – to make that shift by 2025.
Upon becoming an IPO, Genesys will be able to issue shares to investors – available on a stock exchange – and raise greater capital.
Indeed, Bloomberg’s sources – who were not authorized to publicly speak on the matter – believe that Genesys could raise up to $2BN in the IPO.
That funding injection is a significant advantage of spinning into an IPO. However, there are others – alongside some disadvantages – to consider.
The Backdrop
Genesys hasn’t been an IPO since 1999 when Alcatel-Lucent bought the business for $1.5BN.
In 2012, Permira Funds purchased Genesys for the same price, taking the company private.
It has stayed that way ever since, while most of its emerging rivals in the CCaaS space – including AWS, Five9, and NICE – have remained public.
However, since 2012, the value of Genesys has surged. Fast-forward to December 2021, and a funding round led by Salesforce Ventures valued the business at $21BN.
A year later, Reuters reported that Genesys planned to spin into an IPO, reportedly working with Goldman Sachs, Citigroup, and JPMorgan Chase & Co. back then, too.
Now, after two years, the contact center tech juggernaut appears to have dusted off those plans. But that begs two key questions: why now, and so what?
Why Now, and So What?
As suggested, becoming an IPO will help Genesys raise capital, which it can use not only to support its daily operations but also to fund R&D and new growth opportunities.
By freeing up that cash now – at a time when contact center AI is in demand, and its CCaaS-CRM co-innovation strategy is gaining momentum – Genesys may bolster its already strong market position.
Additionally, that extra cash could enable acquisitions that will help Genesys stretch the definition of what it can offer as a CCaaS provider.
After all, as CRM vendors converge on the space – offering digital channels, knowledge management, and self-service tools – CCaaS providers face new competition.
As such, they need to consider what they can offer – beyond telephony – which CRM providers can’t. That will help them ensure they don’t get sidelined as voice plug-in providers over the next decade or so.
By teaming up with Salesforce and ServiceNow, Genesys has been proactive in circumventing that threat. Moreover, its switch to focus more on journey orchestration shows how it’s stretching the value of its portfolio.
Yet, further acquisitions – like its roll-up of Radarr Technologies earlier this year – will help the vendor ramp up that value further.
Additional advantages of becoming an IPO include the opportunity to reduce corporate debt, offer employees stock options, and gain greater media attention via press releases and financial coverage.
Of course, media attention isn’t always welcome, especially the financial scrutiny. Think back two years ago – when Avaya was still a public company – and it couldn’t avoid significant fallout from its pre- and post-bankruptcy ordeal.
However, if Genesys continues to perform well – as its cherry-picked numbers suggest – such scrutiny could help rubberstamp its financial security.
That’s critical at a time when customers carefully consider the financial stability of their tech providers, especially in the CCaaS space where talk of market consolidation is rife.
Considering all this, spinning out into an IPO may seem smart. Nevertheless, there are disadvantages to consider.
For instance, an IPO must manage for short-term quarterly results, not long-term objectives. Then, there is the time commitment for becoming an IPO and the costs of issuing shares.
However, Genesys is likely well aware of all these potential problems and seemingly believes that the opportunities outweigh the challenges.
