Paetec acquires SMB PBX vendor Allworx

Competitive service provider Paetec continued its acquisition spree today with its announcement that it will acquire New York-based Allworx, a move that will strengthen Paetec’s position in the small and medium-sized business (SMB) market.

Allworx develops, designs, markets and sells phone and network systems to the SMB market. The company said the acquisition will allow it to continue to focus on delivering VoIP solutions to the SMB market, but now with the resources needed to compete more effectively with some of the larger TDM key system sellers in the space. The deal would make Allworx a wholly owned subsidiary with manufacturing, distribution, and software and digital hardware engineering services.

Allworx primarily uses value-added resellers as its sales channel, which Paetec will continue to use, along with its extensive agent network. Tom Grinde, executive vice president of sales for Allworx, said that the resellers were pleased with the news of the acquisition because it represents a complementary venture, not one in which Allworx would lose its identity.

“The message we’ve been saying loud and clear to our resellers is we are Allworx and we will remain Allworx,” said Grinde. “We will work with them and help find ways for them to grow their business with us and to grow their business with Paetec. It is a very great, symbiotic relationship.”

The Allworx line will be integrated with Equipment Solutions, Paetec’s existing equipment subsidiary, which is an authorized reseller of Avaya and Cisco equipment. Grinde stressed that Allworx’s intentions are not to displace this relationship, but to expand it into the SMB market.

“Sure, there will be some cross-pollinating between both channels,” Grinde said. “Our existing resellers become Paetec resellers; Paetec resellers hopefully become Allworx resellers, but no one is forcing that on either channel…We’re not here to destroy relations that Paetec has with other vendors and vice versa. So it is a very positive, symbiotic relationship.”

The SMB market is one that is relatively uncharted by Paetec, which has focused on the medium to large enterprise market thus far. Arunas Chesonis, chairman and CEO of Paetec, said that the acquisition will allow the company to serve a growing segment of its business.

“We’ve long respected the entrepreneurial spirit and culture that the Allworx management team has created and look forward to working with them and leveraging their expertise to benefit our existing clients,” Chesonis said in a prepared statement. “We’re also pleased about the opportunities we’ll have to offer Paetec’s network services to Allworx’s current customer base.”

Paetec closed a $450-million acquisition of US LEC earlier this year, followed by a Sept. 17 announcement that Paetec would also acquire McLeodUSA. The McLeodUSA acquisition gave the combined company a total of 3.4 million access lines, making it one of the largest CLECs in the United States. Paetec said that when this deal closes, it will bring with it the Allworx portfolio, which includes integrated PBX/Key telephone and network systems and VoIP telephones with a series of advanced communication software options.

The deal was made for an all-cash payment of $25 million and is expected to close at the end of October.