Viral Video Distances Zenith RMM From Zenith Infotech

Viral Video Distances Zenith RMM From Zenith Infotech

Zenith RMM CEO Michael George is further distancing the company from Zenith Infotech, which recently defaulted on a bond payment. The latest move involves a private video from George to Zenith RMM partners and customers. Although Zenith RMM and Zenith Infotech continue to partner, George in the video said Zenith RMM is not encumbered by Zenith Infotech's bond issue with debt holders. Here's a closer look at the video.

To rewind a bit, Summit Partners, a growth equity firm, acquired Zenith RMM from Zenith Infotech in September 2011. Around the same time, Zenith Infotech defaulted on a bond payment. In a video statement apparently released to partners today (Nov. 7), George said Zenith RMM first heard about Zenith Infotech's bond default through the press. Unless otherwise indicated, all of the statements attributed to George below are from the Zenith RMM video, which sources shared with MSPmentor earlier today.

George revealed that Zenith Infotech owns 15 percent of Zenith RMM, but Zenith RMM is a completely separate company, he asserted. George asked partners to focus on the facts rather than "deal of the day" promotions from rivals. Also, George said Zenith Infotech CEO Akash Saraf remains on the Zenith RMM board "for now," a potential clue that Zenith RMM is watching the situation closely.

Separate Companies

Throughout the video statement, George further distances Zenith RMM from Zenith Infotech, though the companies continue to partner as well.

"In spite of anything you may have read or heard, let me reaffirm, in the clearest and strongest terms possible, that Zenith Infotech and Zenith RMM are two completely separate and independent companies," said George in the video. "Zenith Infotech has a minority interest in Zenith RMM, but has no control whatsoever over its operations or its decisions." Later in the video, George said Zenith Infotech owns about 15 percent of Zenith RMM.

In the video and email, George mentions that Zenith RMM acquired:
  • 552 employees in a NOC based in Mumbai, India
  • 97 engineers who develop Zenith RMM software and related NOC software
  • 52 employees in Warrendale, Pa., who work in account management, sales and Help Desk positions
  • The educational platform Zenith U, MSPtv.com and related equipment and services
Added George:
"Following the transaction [with Zenith Infotech], Zenith RMM is now a separate, US-headquartered company organized under the laws of the State of Delaware. We have assembled a strong management team that comprises an additional 11 highly experienced industry professionals in our Boston office. There will be 20 more added there and 40 across the entire company by the end of this year."

Firm Financial Ground

George also describes how Zenith RMM is backed by Summit Partners, a growth equity firm that has made more than 330 investments and raised more than $11 billion in capital over the past 30 years. Said George:
"Summit Partners is a majority owner of Zenith RMM. I was offered the opportunity to invest with them and felt strongly enough about Zenith RMM to do so. Along with other members of our management team who have also invested in the company, management’s collective ownership interest is nearly equivalent to Zenith Infotech’s minority stake in Zenith RMM. Today, Zenith Infotech owns less than 15% of Zenith RMM, on a fully diluted basis.For now, Akash Saraf, CEO of Zenith Infotech remains on the Board of Directors of Zenith RMM along with me and two senior professionals from Summit Partners."

Didn't See Bond Issue Coming

In the video, George concedes that Zenith RMM's due diligence did not focus on Zenith Infotech's corporate bonds at issue. "Prior to the news, we were unaware of the terms of those bonds or any approaching maturity, let alone the default," George said. "The public announcement of this transaction has prompted Zenith Infotech bondholders to start litigation in India to, among other things, discover the terms of our deal, and to pursue Zenith Infotech’s assets."

However, George said:
"Zenith RMM is in no way encumbered by any of the liabilities or debt obligations facing Zenith Infotech. Its bondholders have simply pursued an aggressive legal course of action against all parties connected with the sale of the RMM business. Last week, the Indian court ordered disclosure of the terms of the transaction. We are in the process of submitting details of the transaction now. In short, we know we paid a fair price for the remote monitoring and management assets acquired from Zenith Infotech. As bondholders are in the business of managing money and not a business like Zenith RMM, we are confident that their focus is on recovering their money, not the Zenith RMM business. Should they continue their aggressive litigation tactics, however, and continue to involve Zenith RMM in their dispute with Zenith Infotech, we are certain that we will prevail in court and prove any claims they have to be without merit. We hope this does not happen but, if it does, we trust that you will see it for what it is and not let it distract you from the superior products and service that we offer.

Pursuing Partner, Customer Loyalty

Looking ahead, George said, Zenith RMM will continued to "provide the highest level of support for Zenith Infotech products" regardless of Zenith Infotech's bond issues. At the same time, Zenith RMM is pursuing partnerships with additional cloud service providers, some of whom likely compete with Zenith Infotech, MSPmentor believes.

George also cautioned partners not to shift RMM providers amid all the market chatter. "On the margin, opportunistic competitors offering the “deal of the day” may lure some partners away," said George. "Frankly, we believe these are hasty decisions that lead to unnecessary disruptions in our partners’ businesses. We ask all partners to be patient, as the facts unfolding from these events will demonstrate that Zenith RMM should continue to be your preferred provider now and in the future."

George noted that Zenith RMM is working on many new developments that will surface in the first half of 2012, including extended endpoint coverage for Mac OS, Linux, smart phones and tablets; extended virtualization support; and improved portal and patch management efforts. George also mentioned several NOC enhancements that are under development.
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