The two companies announced the transaction July 31.
The Boston-based telecom firm plans to hire upwards of 50 new employees as it plans to share Iserv’s data center with the world. The Iserv name will remain in place and the company will be leveraging 382 Communication’s expansive network and buying power to roll out aggressively priced new services, including wireless and business class voice.
The state-of-the-art Iserv data center and headquarters on 33rd Street in Grand Rapids will also serve as an important expansion hub and national customer support and billing center for 382 Communications going forward, said 382 Communications Chairman Rich Koch.
“Iserv came up for sale at the end of last year,” Koch said. “We were looking to expand our opportunities. We flew out to Grand Rapids and liked the place. Iserv also has thousands of customers. We do a lot of telecommunications stuff, but with Iserv we can increase that not only for our customers, but also for theirs. They also have a good data center that will let us set up a disaster recovery center for our customers worldwide.”
Koch said Iserv will need upwards of 50 new people in sales, technical and support staff in the months ahead. 382 Communications is a provider of voice, data, and network services to telecommunications service providers and enterprise clients with a need for high-throughput, low latency optical and wireless solutions and a modern, fully redundant network with global presence. Iserv has about 40 full and part-time employees today.
“We’ve been in the telephone service (business) for 15 years,” Koch said. “We develop switches in the cloud. We’ll increase the value of Iserv with our voice, data and telephone numbers around the world.”
Iserv also will now provide wireless connectivity, including Wi-Fi hot spots, Koch said. The company plans to provide free Wi-Fi hot spots in downtown Grand Rapids during Art Prize this fall. Plus 382 Communications provides competitively priced telecommunications services for schools, libraries, boat marinas — none of which Iserv provided before.
“There’s nothing we can’t offer our customers now,” Koch said. “If someone needs a phone system in Grand Rapids or Altoona, we can do that. We can provide phone numbers in China. We sell 7 (million) to 9 million minutes a day worldwide through wholesalers like AT&T and Bell Canada.”
382 Communications will move its call center from Boston to Grand Rapids so both 382 Communications and Iserv customers can get live service help 24-7 any day, Koch said.
Former Iserv CEO Shepherd will assist the company in an advisory capacity. Other members of the company’s leadership team will remain in place, with continued oversight over Iserv’s network, back-office systems and customer service.
“Iserv has a 17-year operating history, a loyal customer base, and an established reputation for cutting-edge technology backed by exceptional service,” Shepherd said in a statement. “The arrival of 382 Communications represents great news for Iserv, its customers and our region as whole. This national company will bring not just new services, but also an accelerated pace of innovation and growth over the long term. Their selection of Iserv is a great compliment to everyone on the Iserv team, and to our community.”
Shepherd told MiBiz the deal closed June 1, but was not announced until late July to give Iserv time to tell its 10,000 customers. All of them were very happy about the change, he said. Terms were not announced, and Shepherd declined to even confirm revenue estimates, speculated by some business services to range from $20 million to $40 million annually.
Also happy were the Iserv investors, a group of “less than 10 people” based in West Michigan, Shepherd said. Iserv has never publicly disclosed who its investors are, and Shepherd said he would not do so now other than to say he was one of them.
“It was a good deal for the ex-owners, including myself, as well as the employees and the customers,” he said.
Shepherd took over a much different Iserv in 2001. Iserv’s customer base was 80 percent residential — most dial-up Internet customers — and 20 percent business. Today those numbers are reversed, he said. As a result, “the last several years have been very profitable,” Shepherd said.
Shepherd was a turnaround expert who worked for The Gores Group, an M&A firm in Los Angeles owned by Michigan native Alec Gores. His younger brother and fellow Michigan native, Tom Gores, is the new owner of the Detroit Pistons professional basketball team.
Shepherd said another reason he took the Iserv job was to provide stability for his family, who had moved with him from job to job when he was with Gores.
“I’ve had a lot of phone calls from people that want my help locally. In the fall, I’ll settle back and decide what I want to do next,” he said. “Maybe I’ll build or buy a company in Michigan. Life’s been good to us.”
Mike Brennan is senior technology writer at MiBiz. His day job is editor and publisher of MITechNews.com