Dublin-based cloud telephony firm Blueface has announced a merger with US peer Star2Star. The new business will be called StarBlue and have a combined workforce of more than 500 people.

Both operating companies will retain their existing trading names in their respective markets, Star2Star in the US and Blueface in Europe.

Blueface was founded in 2004 and its proprietary cloud voice platform services business customers of all sizes. Current CEO Alan Foy (pictured) was a finalist in the EY Entrepreneur of the Year competition in 2017. Foy started off in wealth management with NCB and subsequently set up an investment vehicle, Venture Wave, which tempted Lord Iveagh of the Guinness family on board.

Blueface was the main investment target and Foy joined as CEO, completing a management buy-in in 2010. From 2007 losses of €1.1m, Foy wiped out the revenue deficit on the balance sheet by 2015. Blueface booked a loss of €322,000 in the year ending March 2016, while net worth was €514,000. The firm had 50 staff on its books last year and is planning to increase this number to 130 people by 2022.

In Association with

Star2Star Communications was founded in 2006 and also provides cloud telephony and associated services. It posted 2016 revenue of nearly $60m and employs 300 staff. The firm announced in 2014 that it would create 350 jobs over the following five years.

Norman Worthington, co-founder and CEO of Star2Star, will become executive chairman of Star2Star and Blueface. Alan Foy becomes CEO of Star2Star and group CEO of StarBlue. Nameer Kazzaz, currently CTO at Blueface, will assume the group co-CTO role for the merged company along with Sergey Galchenko of Star2Star.

StarBlue will be headquartered in Sarasota, Florida – the current HQ for Star2Star – while Ireland will remain as the EMEA headquarters for Blueface.

Brian Martin, currently general manager of Blueface, becomes senior VP, Blueface EMEA, where he will assume overall responsibility for sales and operations across Europe.

Game Changer

Alan Foy said that his firm’s merger was a “game-changing event” in the cloud telephony sector. “This merger positions the combined Blueface/Star2Star company as one of the leading platform and service providers that can service businesses of all sizes, partners and wholesale customers globally,” he added. “For now, it is very much business as usual and there will be no change in branding or in the preservation of vital relationships with our partners and customers.”

Norm Worthington is a serial entrepreneur who established Star2Star in 2006. The company was a pioneer in bringing VoIP communications to the SME business mainstream in America. In recent years Star2Star was cited on the Forbes Most Promising Companies list, the Deloitte Technology Fast 500 three times, and the Inc. 500|5000 five times.

Star2Star communications solutions are sold through a diversified network of partners that includes distributors, master agents, managed service providers and certified installing dealers. Star2Star systems are used by hundreds of thousands of business users, including many large national chains such as Dollar General and Kentucky Fried Chicken with multi-location communications requirments.

The deal sees the BDO Development Capital Fund exit from Blueface. The private equity provider invested €10m in Blueface in  March 2017 to fund its international expansion. BDO's Andrew Bourg commented: “It is really satisfying to see this further significant and international development by an Irish company.”

BDO's departure from the scene indicates that that what has been styled as a merger is in effect a takeover of Blueface, albeit a friendly one.

Blueface was advised by Mason Hayes & Curran, Grant Thornton and Q Advisors (Denver).