Consonus, Major Managed Service Provider, Cancels IPO

Consonus Technologies Inc., a data center expert and managed service provider, has cancelled its initial public offering (IPO). The Cary, N.C.-based company originally filed to launch an IPO in May 2007, notes the Web Host Industry News.

But turbulent financial markets and a less-than-stellar IPO by rival RackSpace forced Consonus to remain private — at least for the time being.

TheStreet.com recently wrote a very critical article about Consonus, suggesting that the company faces multiple challenges — including heavy debt, a falling market value, and concerned creditors such as Avnet.

This is a tricky time for managed service providers and data center companies that need to raise money. On the one hand, recurring revenue models can give investors peace of mind. But many MSPs and Software as a Service (SaaS) companies have seen their stocks plummet this year (check out our MSPmentor SaaS 20 Stock Index) because profits haven’t grown fast enough to appease investors.

Consonus was wise to stay private. But the company is having a difficult time complying with financial covenents involving Avnet, TheStreet.com has reported.

Not all MSPs, it seems, are immune to the economic turmoil.

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