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Getting Ready for the Prom

Getting Ready for the PromDo you remember your high school prom? For many of us it’s probably one of those life events that we choose not to think about or just try to forget—unfortunately, your mom still has the pictures. The combination of bad hair, the price paid for that tux, or dress, that came in a color that you won’t find in a box of Crayolas, and the laundry list of other related expenses that taxed the earning power derived from our minimum wage jobs amounted to an experience that taught us a valuable lesson in the difference between expectation and reality. But if you’re honest with yourself, you’ll also remember how much you really wanted to go, and how important it was to be squiring the right member of the opposite sex into the most important soiree of your young life. Those of you with steady boyfriends or girlfriends skipped this step, but for the rest of us, this meant doing everything possible to increase our chances of being asked by Mr. or Ms. Right, or at least Mr. or Ms. Right Now. However, joyous or painful these memories may be for you, I bring them up due to their similarity to the recent increase in merger and divestment activity within the data center industry.

As many of you may have read, the guys and gals at Zayo just shelled out $675 million to engulf Latisys to continue a trend that includes the recent merger of Fortune and Infomart as well as Tierpoint’s acquisition of Xand. And while these guys were busy bulking up, Digital Realty was getting ready for swimsuit season by shedding a number of its less profitable assets. While still early, one has to wonder if this isn’t the beginning of a larger trend where anyone and everyone becomes a potential target, and for many, this means adopting the behavior of a prospective prom date. The only thing consistent about all of these deals is my friends at DH Capital are in the thick of ‘em all.

If these early flirtations do mark the beginning of a lot of “conscious couplings” within the industry, would anyone be surprised? The past five years has seen the entry of a number of new companies into the data center business. While a number of them have joined the fray with the intention of growing to become an industry leader, one has to wonder if many haven’t adopted the “I’m funded. I’m acquired. I’m retired” business model that defined the go-go days of the 90’s. Not that this is necessarily a bad thing, since trying to “pretty yourself up” does have some positive by-products.

The effort to spiff yourself, or your company, up to become the most attractive potential selection, be it for the prom or acquisition, often leads to changes in behavior that are admirable whether you are “picked” or not. How many of you started making a conscious effort to ensure that your hair looked good, your shirt had buttons, rather than some salacious or insipid graphic, on the front, and you tried to smile more and be nicer to folks. It’s no different when you try to gussy up the company so that you’re ready to begin entertaining prospective suitors. You clean up the old balance sheet, perform that long overdue maintenance and maybe even try to obtain some of those certifications that you’ve been putting off so that when folks start doing their due diligence, you’ll be the one that gets the corsage and not those “johnny come lately” colo guys that are also under consideration. The net positive of all this, both from a prom and acquisition standpoint, is that even if you weren’t asked to the big dance, or picked to be a partner, you’ve embarked on a pattern of behavior/operations that made you or makes your company better in the long run. So there’s that.

It will be interesting to see if actions like those of Zayo constitute the beginning of the upward movement of a trend that, based on the histories of related industries, is inevitable, or turns out to be just a minor opening salvo. In either case, they should be seen by many data center providers as a harbinger of things to come, and the catalyst for making their companies as attractive as possible to strengthen their ability to act (in prom related terms) as either the asker or the askee. Perhaps, best of all, providers that begin the preparation process now will benefit from the improvement of their operations without having to worry about what their hair looks like.