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Speaker: It's 2019, a 300 seat contact center, a regional insurance carrier, but around for 40 years decides it's finally time to leave their Mitel system. Their advisor brings in a shortlist. They do demos, they pick a platform, they sign a three year deal, and their advisor, well, they collect a commission and move on to the next client.

Fast forward to 2025, that same company gets a letter. Their platform is heading towards end of support. Migration required 30 days to respond. No budget set aside, no internal IT team to run a migration. No advisor in their corner because that advisor hasn't called them since they signed that contract.

300 people, 40 years of customer history, and now they're starting a vendor evaluation from scratch because nobody told them to watch the finances of the company. They just tied their business to. That's not a horror story. 

That's Tuesday in the SMB mid-market, and today we're talking about why this keeps happening, [00:01:00] who's responsible for it, and exactly what needs to change.

Here's what this episode's about. When a major CAS or UCAS vendor has a bad year, that means they go bankrupt. They get acquired, they freeze their product, or quietly start cutting their support team. Enterprise companies have lawyers, procurement teams, and dedicated vendor success managers who start making calls.

They get options, they get runway, but SMB and mid-market companies, well, they find out when the invoice changes, the support ticket takes three weeks, or a partner sends them a migration notice. The forgotten 5,000. The company's vendors fly over on their way to the logo. They can put in a case study. And this isn't a technology episode, it's a due diligence episode.

If you're a tech advisor, you have to hear it because the gap between what your clients think they bought and what you actually sold is a big problem. 

So let's put some real names to this [00:02:00] because the mid-market vendor stability problem, it's not theory. Avaya two bankruptcies, the second one in 2023, thousands of SMB and mid-market contact centers running Avaya infrastructure, some on-prem, some cloud, and the message from the company was essentially, Hey, we're still here.

Keep calm. Except the engineering talent had been bleeding out for years. The product roadmap had stalled, and the companies that felt it first weren't the Fortune 500 accounts with dedicated white glove support. No. It was those a DC insurance agencies or the 200 seat regional healthcare providers who suddenly couldn't get a technical support escalation returned in under a week.

Genesis, engage the on-premise workhouse for mid-market contact centers had development frozen and no announced end of support date in yet. In the same breath, Genesis was positioning itself as a cloud first company for customers running engage. That message between the lines was clear. Sorry you're not the future, [00:03:00] but nobody said it out loud.

Customers started figuring out themselves when features stopped updating, and then implementation partners started getting harder and harder to reach. Mitel, a company that had acquired ShoreTel, Toshiba's, uc, business and others, built a sprawling business on s and b and mid-market segments, the very folks were talking about, and then found themselves in a financial position where the product direction became genuinely unclear to the people who had bought it.

Customers who had chose Mitel. Many cases, because their advisor told them to, all of a sudden found themselves talking to an advisor who's now not answering their phone calls. Now that new question started. See, these aren't edge cases. These are three of the most common platforms, or at least were in the mid-market contact center space.

And every single one of them create a vendor stability crisis that fell hardest on the customers with the least leverage and the least information to act on. Advisors are recommending platforms based on feature demos, not [00:04:00] financial health audits, and that's the gap that keeps creating these situations.

So let's be frank about something, the advisor community. And I'm in it. So this is as much a self-critique as anything. Um, we constantly talk about vendor vision, uh, product roadmap, and then we build our recommendations around feature matrices and demo scores and integrations. But what we almost never do is sit down with our client and talk about.

The financial health of the company that we're having them sign the three year contract with, like, who owns this vendor? Is, is it private equity? And, and if so, um, well, what's the fund investment timeline? Uh, what does the revenue trajectory look like? Has support models changed over the last 18 months?

And what does the contract say if ownership changes? Do they have any platform continuity protection at [00:05:00] all? See, nobody asks these questions in a sales cycle, and I get it. It's, it's awkward. It feels like it slows the deal down and most buyers don't ask for it. But here's the thing, enterprise companies have legal teams that are asking these questions.

SMB buyers have you as a tech advisor, and if the advisor isn't doing that work. Yeah, nobody is. 

Remember that insurance carrier from the beginning of the conversation. Here's the part of the story I forgot to tell you. The platform they were on had been acquired by a private equity firm two years before they signed, and that PE firm had a five year fund cycle.

So by the time that migration notice landed, the investment thesis had already shifted, and the product was being managed for margin, not for growth. The warning signs were all there. The advisor just simply wasn't looking for them, and the buyer didn't know even to look. The company [00:06:00] ended up spending nine months and $400,000 on an unplanned migration.

Not because the technology failed, but because nobody did the financial due diligence that an enterprise buyer would've done. Just as a matter of course. See, this is a thread worth pulling on right now. 

There's over 200 companies competing in the CA Space 200. The market is not going to support 200 vendors for long term.

That just, that's not realistic. So consolidation, well, it's coming. As a matter of fact, it's already happening. And when it does continue to happen as it is, the companies that get acquired or wind down or get merged into something else becoming an un unrecognizable mess, no, they're not gonna give their s and b customers six months of notice and a free migration.

There's also the private equity angle that doesn't get talked about enough in the channel. A meaningful portion of the mid-market. UCaaS and CCAS vendor landscape is entirely PE backed right now. [00:07:00] And PE firms, again, have fun timelines and when that clock runs out. They're out, they exit, they will go, whether it's a sale, a merger, a wind down, and what ends up happening to that product roadmap, the support team, your client's contract in that scenario is rarely, if ever spelled out in the actual agreement they signed.

The time to ask that question was before the contract was signed, not after the exit announcement has landed in their inbox. 

So if you're an advisor, here's what I want you to take away. Before you make any recommendations in the s and b mid-market space, I want you to run what I call the vendor health five, five easy questions.

And if you can't answer them, you're not doing your due diligence. First. Who owns the vendor right now and what's their financial incentive for the next three to five years? Are they PE-backed, publicly traded, founder led, venture-backed? Well, all those different companies have different risk [00:08:00] profiles.

Question two, has support quality or response time changed in the last 18 months? Check community forums, recent G two or Gartner peer insight reviews, and then of course, ask your channel contacts directly. Question three, what is the stated product investment trajectory? Are new features shipping out regularly and has development slowed on the platform that your client is buying?

Question four, what does the contract say about material changes in ownership, pricing or platform support? Does your client have exit rights if a vendor is acquired? And question five, what would a forced migration actually cost your client in time, money, operational disruption? And does that justify the platform without contractual protection?

And for buyers, if your advisor isn't having this conversation with you, un prompted, well ask them to. And if they can't answer these [00:09:00] questions about the platform they're recommending, well find an advisor who can. So if you're an advisor, run the vendor Health five on every recommendation. Know your client's contract terms before they sign.

Check ownership structure and PE involvement in every vendor you recommend. And of course, stay in contact 'cause vendor situations change. All the time and guys proactively surface migration risks before they become urgent. And if you are an SMB buyer, ask your advisor to walk you through your vendor financial health demand exit rights.

If your contract ownership ends up changing, check recent support reviews before signing and make sure you know what a force migration would actually cost. And remember, your advisor's job doesn't end at contract signature. 

The bottom line is this, vendor stability is a risk category just like security risk, integration risk or implementation risk.

And it belongs in every [00:10:00] evaluation. It belongs in the advisory conversation. And right now in the market with over 200 CC competitors and the PE ownership way that's rolling through the mid-market ownership in uc and cc, well, uh, the risk has never been higher and, and right now the reality is. It's the highest on the companies that frankly can afford lease to absorb it.

So as an advisor, you need to help make sure you're doing the work before that contract is signed, not after a migration notice lands. 

And by the way, that 300 seat insurance carrier from the beginning of the episode, uh, I forgot to tell you, they recovered. It did take them, like I said, nine months and a lot of money, 400 k that they did not plan to spend.

But they're in a way better situation now, way better platform. And, uh, they have contractual protections. And by the way, an advisor who actually picks up their phone and actually stuck around. See that right there? That's the outcome we're aiming for front load hard conversations so your clients don't have to have those hard [00:11:00] conversations at the worst possible time.

So what's the biggest BS? From today's episode, uh, don't think that having an awkward conversation about a vendor's financials is something that's not worth having, especially if you're a technology advisor. And for you s and b buyers out there, or mid-market buyers, don't be afraid to ask about those big companies and all their financial health because hey, at the end of the day, you're the one paying the bill.

Alright, so with that being said, hit subscribe so you don't miss a single time. We have a brand new episode live, and if you know an advisor or a buyer who's in mid evaluation right now. Send them today's episode. Who knows today's conversation might save them, uh, from signing a six figure mistake. And, and by the way, if you want to connect, go ahead and find me over on LinkedIn.

You can find me at Brian Nichols sales. And with that being said, thank you for joining us on today's episode of CX Without the bs. I'll see you next time.