Corvisa Acquired by Silicon Valley’s ShoreTel for $8.5M

Milwaukee-based Corvisa, which develops cloud-based software for call centers and other businesses, was sold on Monday to a California communications company for $8.5 million. The all-cash deal is part of a strategic shift for Kansas City, MO-based Novation Companies (OTC: NOVC), a public holding company that focuses on scaling startups, which had owned a majority stake in Corvisa since 2012.

The buyer is Sunnyvale, CA-based ShoreTel (NASDAQ: SHOR), which provides hosted phone systems and other services. CEO Don Joos says he and colleagues viewed Corvisa as an attractive acquisition target because of its easy-to-connect software, global footprint, and knowledgeable staff.

“There’s a great technical team at Corvisa,” Joos says. “ShoreTel was interested in Corvisa’s technology, but also the technical talent in the Milwaukee market. This will become a hub for us.”

Joos says that 94 Corvisa employees will join ShoreTel as a result of the purchase, and that they’ll continue to work from Schlitz Park, a corporate center in downtown Milwaukee.

Shares in ShoreTel fell slightly Monday. The company’s stock price closed at $9.43 a share, down 1.3 percent on the day.

Corvisa had been losing money—according to reports from the Milwaukee Business Journal, it lost nearly $15 million in 2014 and millions more this year—which did not make it a sensible holding for Novation, its parent company. In a press release, Novation CEO Rodney Schwatken called the sale “good news,” and explained that it fits into his group’s broad financial plan.

“Novation has approximately $675 million in federal net operating losses which may be carried forward to offset future taxable income,” the company said in the release. “Because Novation has large net operating losses, Novation has the ability to operate in a tax-efficient manner. Novation intends to continue its strategy of seeking to acquire operating businesses or make other investments that generate taxable earnings.”

Novation had poured money into Corvisa, which was previously known as CorvisaCloud and before that, IVR Central. Last year, Novation infused $30 million into Corvisa, which came on top of previous investments totaling at least $7 million, Matt Lautz, then Corvisa’s president and now its CEO, said at the time. Lautz is expected to stay with the company, says ShoreTel’s Joos.

Businesses across a variety of industries are increasingly managing their IT operations using cloud-based “hosted” models, where data and traffic flow through offsite servers, says Joos.

“When I talk to [chief information officers], they say the reason they’re looking at hosted offerings is that they know the technology will change so much in the next two years that they need the flexibility,” Joos says. “Maybe I’ll pay a little bit more. Maybe not. But I’ll have flexibility that I wouldn’t have if I made an on-premise capital expenditure.”

ShoreTel said in a press release that it plans to expand its European operations, including in Amsterdam and the U.K., where Corvisa operates data centers.

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