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Overview

M/C Partners was a founding investor in Zayo, a fiber network consolidation platform, formed in 2007 to consolidate underdeveloped regional fiber assets throughout the United States.  Operating at a relentless pace, the Zayo management team succeeded in identifying, integrating, and significantly improving the operating margins of its 30+ acquisitions.  Driven by the team’s operating expertise, Zayo became the largest pure play broadband infrastructure provider in the United States. 

How we added value

  • Provided Seed Stage Capital M/C Partners and Columbia Capital provided seed capital to form Zayo.  The firms co-led the initial $184 million equity raise with M/C Partners committing $50 million.
  • Partnered With Best-In-Class CEO M/C partnered with a best-in-class CEO in Dan Caruso.  Prior to Zayo, Dan had been a founding executive at Level 3 and the CEO of ICG Communications, an M/C investment.  This partnership with Dan was possible because M/C had built a strong relationship with Dan over several years while he led a tremendously successful turnaround at ICG.
  • Leveraged Industry Expertise to Develop Investment Thesis Working with Dan, the investment team recognized that accelerating demand for bandwidth-intensive applications such as video streaming, enterprise storage backup, and wireless data transport, would drive strong growth in the fiber industry. This trend was not fully understood at the time and the team saw a unique opportunity to establish a leadership position in broadband infrastructure by consolidating the highly fragmented, undercapitalized market of fiber assets.
  • Supported Growth Strategy M/C provided deal support as Zayo rapidly pursued acquisitions, adding and integrating more than 30 companies in 7 years.

Outcome

From 2007 to 2014, Zayo became an expert in rapid, efficient integration and amassed a sizable asset base: 81,000 route miles of fiber connecting more than 16,000 buildings including 37 data centers in 308 markets worldwide. In October 2014 the company completed a very successful IPO that valued the company at ~$5 billion.