Chapter VII: The Reconsolidation

“What you have been seeing is the gradual reconsolidation of an industry that is highly capital intensive and that’s perhaps best served by a relatively small number of large companies,” an analyst surmised in January 2002. We are now fast-forwarding to the mid-2010s, with over a decade of his “gradual reconsolidation” behind us and the arc of consolidation gaining momentum.

Verizon had acquired WorldCom after the Bust and, in 2011, added XO after Icahn extracted his value from buying XO on the cheap during XO’s bankruptcy. It would be Verizon’s final major fiber acquisition.

SBC had acquired AT&T and then adopted the AT&T name. The acquisition of AT&T included Teleport, the Renegade AT&T acquired during the Boom, as well as the troubled intercity fiber providers AT&T gulped down during the meltdown. This was the last of AT&T’s fiber meals.

All of which brings us to telling how the remaining national Bandwidth Infrastructure platforms were formed. We will complete the saga of Level 3, reveal the formation story of Lumen, and, finally, turn our attention to Zayo, the company I founded in 2007.

Grab a cappuccino and sit in your favorite recliner. I have several wild stories to share.

Level 3—Jim Crowe and Jeff Storey#

Backspace to Level 3 in 2002, when I was still with the company. The stories of my ICG take-private, Huber’s Broadwing acquisition, and Icahn’s XO shenanigans had not yet happened.

Level 3’s Jim Crowe had avoided bankruptcy by pulling two diamonds from the rough: one named Howard Diamond and the other Warren Buffett. This double bank shot enabled Crowe, like Icahn’s XO, Huber’s Broadwing, and my ICG, to become a phoenix rising from the ashes.

Level 3’s rising had two differences from the rebirths of XO, Broadwing, and ICG. First, the threat of bankruptcy was still a cloud that hovered over Level 3 during its phoenix phase. Second, Level 3 would not be content with a good exit. Crowe wanted to finish what he started. He wanted to be so wildly successful that Level 3 would be viewed as a monopoly that needed to be broken apart. He knew, as the phoenix phase was beginning, that he had a long road in front of him.

“I’ve joked that before I retire I’d like an antitrust investigation,” Crowe said. “But that’s a problem for another day. Right now, everybody’s got to keep from going broke. That’s what we’re maniacally focused on.”

First, Crowe needed Level 3 to fix its day-to-day operations, as, despite the hype touting Level 3’s team, the organization was painfully dysfunctional. Revenue was shrinking. Cash flow was negative. And the culture was a mess.

A decision was made that we needed to bring in an executive who knew how to run the business. Enter O. Lee Jobe III, the president of Concert, the BT, and AT&T joint venture. Hired to be Level 3’s savior, Jobe was named president of global operations, reporting to O’Hara. Jobe’s responsibilities were, as I recall, the same as O’Hara’s. He was, more or less, O’Hara’s only direct report. Still following?

Jobe came in hot. Before “LOL” became an expression, he would laugh out loud while lecturing us on our pure incompetency. Though he had a point, his laughing also helped mask his substance abuse problem. After a late night NYC binge, Jobe showed up tardy and disheveled to Crowe’s Wall Street analyst day. That was the last time I recall seeing Jobe. He went to rehab and never returned.

“Though receiving positive recommendations and completing a thorough interview process, the hiring of Jobe was a disaster,” O’Hara recounted. “He was clearly struggling with what I assumed to be some type of substance abuse issues. I offered to send him to rehab while making it clear that rehab would be a condition of his continued employment. Jobe took me up on my offer. expecting to rejoin Level 3 after he completed his stint. I flew to New York once he was released and let him know his Level 3 position had been eliminated.”

Jobe passed away in 2010, following a three-year battle with liver disease.

Before he left, Jobe brought on two of his Concert lieutenants—Neil Hobbs and Brady Rafuse. Putting aside Jobe’s issues, these guys were cocky, direct, and hardworking. They knew their shit. Hobbs and Rafuse had little to lose as newcomers to the Level 3 mess. This was empowering. The Starsky and Hutch duo was particularly adept in guiding the sales and marketing side of the house. Hobbs and Rafuse were also a pile of dangerous fun to hang with.

In 2002 Hobbs, Rafuse, and I developed a special relationship. They concluded I knew the product, network, and financial side of the house—as well as where the dead bodies were buried from our first six years.

The three of us locked arms. Hobbs and Rafuse upscaled the go-to-market organization, something that was always lacking at Level 3. I used the product organizations to bring a commercial and financial focus to network, product, and service initiatives. No more drama. No more big strategic thoughts and colorful storytelling. We needed to sell the right services to the right customers at the right prices. For me, it was the first time where I could envision how to properly run a complex telecommunications organization, where emphasis was placed on value-creation outcomes.

We drove the entire company focused on the tactical realities of running a telecom business. The partnership between Hobbs, Rafuse, and me was going strong. Level 3 was turning the corner and steadily clawing its way back. Then my career at Level 3 came to an abrupt and confusing end.

I was invited by a Level 3 sales executive to participate in a large customer meeting at Level 3 headquarters. I spoke a lot, I guess, and the sales executive thought I was being disruptive to her agenda. During a break in the multi-hour meeting, I was asked to see my boss—Level 3’s vice chair and former Bell South executive, Buddy Miller.

Before remote executives were a thing, our vice chair attended to his role from his quiet ranch near Atlanta. We’d see him every month or two. As best I could tell, he was my boss because Crowe wanted a buffer between O’Hara and me, as tension had developed between us in recent years.

When I sat down with Miller during the break, it was clear someone had instructed him to talk to me about my behavior in the meeting. My mindset wasn’t ready to hear a lecture. I felt Level 3 had done me wrong during the 2000 reorganization and, post Jobe, failed to acknowledge I was a major reason the business was on an upswing.

My recollection was that I ended the conversation after about five minutes. “I’m done,” I told Miller and left the office immediately and didn’t return. It was a childish reaction, yes, but I was done with being underappreciated.

After a week I met Crowe for lunch. He asked me to return, ease back into Level 3, and all would be fine. I did, but I had no spirit left for the company. A couple of months later, I left for good.

Was the departure a result of poorly handled communications? Did I get fired? Were Miller and O’Hara reacting to me just being ready to leave and showing it? Or did I quit? Yes is the answer to all of the above. Also, I had been working with colleagues who weren’t so keen on my increasing power in the Level 3 organization, so they perhaps saw an opportunity to clip my wings, which was not going to work for me this time.

Though devastating to me then, my cutting this cord was a true gift. If I had stayed, I wouldn’t be the storyteller of this book.

In addition to fixing the day-to-day management of the company, Level 3 saw consolidation as the opportunity to cement its role as the industry leader. An industry executive took notice, saying in 2002, “I hope Level 3 is amazingly successful at buying other companies. It’ll be a good thing to have fewer players.”

Level 3 was amazingly successful as a driver of consolidation, and the company was fantastic for the industry.

In 2003 Level 3 acquired Genuity for $137 million. The $680 million purchase of WilTel 2 took place in 2005. In 2006 five acquisitions were completed: Broadwing for $1.4 billion and metro providers Progress Telecom,Progress Telecom was formed in 1998 by its parent, electric utility Florida Progress, to leverage its 1,100-mile fiber network. The telecom subsidiary of Carolina Power & Light was merged into Progress, which brought the fiber assets to 3,000 miles.

In 2003 EPIK Communications merged with Progress, which resulted in EPIK’s investor Odyssey Telecorp owning 45 percent of the combined entity. EPIK, the telecom subsidiary of utility Florida East Coast Industries, invested $450 million during the Boom. During the Bust, they sold to Odyssey for $500,000. At the time of the sale to Level 3, Progress had nine thousand miles of fiber assets throughout the southeast. Level 3’s $137 million purchase price was a great buy. ICG Communications, TelCove,See appendix 3, “More Bandwidth Stories,” to learn more about TelCove and its earlier incarnation as Adelphia Business Solutions. and Looking Glass NetworksLooking Glass Networks was founded in 2000 by my former colleagues Lynn Refer and Sunit S. Patel. Refer and I were together at Ameritech, MFS, and WorldCom, where he assumed my position when I departed to co-found Level 3. Patel was the treasurer of MFS when it was sold to WorldCom. He continued with WorldCom after its acquisition of MFS and served as its treasurer between 1997 and 2000.

Looking Glass raised $200 million from Madison Dearborn Partners and Battery Ventures. Refer and Patel added $275 million in debt, anchored by $100 million from Cisco Systems. Patel tapped into his Wall Street relationships, with support from each of JPMorgan Chase, Citigroup Salomon Smith Barney, Credit Suisse First Boston, Merrill Lynch, Deutsche Bank, and Barclays participating.

Looking Glass mimicked the early MFS business plan, with a narrow product portfolio of solely Dark Fiber and transport services. Armed with $475 million, they built metro networks in NFL markets. In 2006 Looking Glass sold to Level 3 for $165 million. for a combined value of $1.5 billion. Level 3 added Global Crossing for $3.0 billion in 2011 and, five years later, tw telecom for $7.3 billion. The WilTel 2 acquisition was particularly noteworthy, as the company’s CEO, Jeff Storey, would rise to significance in the aftermath of the merger.

The impact of Level 3’s consolidation of fiber players was tremendous. A total of 30 percent or more of all fiber built out in the late 1990s and early 2000s was embedded in the Level 3 platform. This was the play Jim Crowe, and the industry, had so desperately needed. Yet Crowe, despite his enormous contributions, came close but didn’t quite make it to the promised land. Crowe navigated the Bust and the rising phoenix eras to be a leader of the reconsolidation. He almost finished what he started but sadly not quite.

Level 3 struggled to deliver on its financial promises. This led to a strange disruption to Level 3’s executive team, specifically involving COO and co-founder O’Hara and CFO Sunit Patel, that played out in the public spotlight. The outcome of this struggle paved the way for Crowe’s successor to be a Level 3 outsider.

Patel was my MFS colleague. Like me, he stayed with WorldCom after it acquired MFS and served as its treasurer between 1997 and 2000. In 2003 Patel joined Level 3 and was named CFO. He played a central role in the fiber acquisitions, using his deep expertise and relationships to raise and restructure debt to enable these transactions.

In late 2007 Level 3 announced, with no forewarning, that it was launching a search for a new CFO to replace Patel. “As the company focuses on ensuring we take full advantage of the opportunities presented by our marketplace, we believe we need a CFO with skills and experience which emphasize both operational and financial management,” Crowe explained. And I, from the outside looking in, scratched my head.

The news caught Wall Street off guard, as it viewed Patel as a strong CFO and a close confidant to Crowe. What was really behind this?

In October 2007 Forbes published “Level 3 Drops amidst CFO Mystery.”

When is a demotion not a demotion?

Variants on that question are sure to be asked over the next few weeks to those who follow Level 3. The firm’s shares stumbled Monday after it announced it will begin looking for a new CFO. The problem is that Level 3 believes its current CFO, Sunit Patel, is ill-suited to guide the projects he helped to start. But Patel won’t step down until a replacement is found, and the firm insists it doesn’t want him to leave. It just doesn’t want him to be CFO.

An analyst provided some color: “Over the last two years he did a lot of financial engineering, and . . . made acquisitions. But he’s weaker at projecting where the synergies are going to come from and what they’re going to look like.”

The analyst went on to explain why the stock was down 11 percent to $4.36 per share. “The person responsible for creating the guidance has announced that he’s leaving.” One week later Level 3 slashed its guidance for 2007 and 2008. The stock sank 25 percent to $3 per share.

The mystery became more mysterious when, five months later, Level 3 announced COO O’Hara would be departing and, in a 360-degree reversal, Patel would remain as CFO.

“Kevin O’Hara has worked closely with me for more than 20 years and this was obviously a difficult decision for both of us,” Crowe explained in a statement. “At this time, however, Kevin and I have agreed that a different perspective will be of benefit to our company.” Level 3 shares dropped 14 percent to $1.87 per share.

In 2024, O’Hara shared his reflections with me on the events surrounding his departure.

In 2006, Crowe indicated to the board that he would like to transition out of the CEO role within a year or two. After an informal process, the board agreed that I would succeed Crowe. We began the transition planning, though the date remained uncertain. Around that time, we were going through a painful integration of seven significant acquisitions. I had grown increasingly frustrated with our finance organization, as the team were great at their external-facing responsibilities but they did not provide the operational financial support that I needed. Sunit Patel and I were frustrated with one another and, separately, tension had built between Jim and me.

One day, Jim invited me to his office where he told me he had changed his mind—he wasn’t going to retire for another few years. He asked if I’d be willing to stay on in my current capacity. I told him I would, though I stressed that we would need to resolve the issues that were the source of the tensions. We agreed to organize our thoughts and get back together in two weeks. When we met, I told him I was all in so long as we could have an honest assessment, perhaps using a third-party executive coaching firm, of the senior team. Jim rejected this idea. Our meeting was at 8:00 a.m. By 8:15 a.m, I was unemployed. Like you, I’m still not sure if I quit or got fired. As a result of my departure, Jim no longer felt the need to replace Sunit and the search for a new CFO was canceled.

An analyst met with Level 3’s executive team at the time of the announcement. His takeaway was that Patel and O’Hara had clashed over strategy. As support for Patel poured in from Wall Street, Crowe decided he should keep Patel as CFO and replace O’Hara.

“Given that most of the issues were operations-related, we never could understand why it was Sunit who was being replaced,” the analyst wrote.

“There’s a lot of disorganization,” said another analyst, as he advised his followers to sell their Level 3 shares. “This whole incident just shows there’s a lot of problems there.”

Later that year Jeff Storey, who remained with Leucadia after it bought WilTel 2, joined Level 3 as COO. Storey’s extensive operational background was seen as the medicine for Level 3’s long COVID. For the next four years, Storey focused on integrating the assets from Level 3’s acquisitions spree.

In late 2011 Level 3 resumed its fiber rollup by buying Global Crossing for $3.0 billion. Immediately following, a 1:15 reverse stock split was executed. As expected, the split caused the stock price, which closed at $1.55 on Nasdaq on Wednesday, October 19, 2011, to open at $22.23 on the NYSE the next morning.

In 2013 Storey succeeded Crowe as CEO.

Crowe acknowledged that the time was right to “get a good fresh set of eyes and ears in. . . . Any CEO has to ask, ‘Am I still the best person, or is it time for a fresh point of view?’ In my case . . . starting probably in ‘06, I thought as soon as Level 3 was financially strong and I had a good replacement, I should go do something else.” Crowe also stepped down from the board.

“Jeff was the clear and unanimous choice of the board,” said board chairman Walter Scott. “With 30 years of industry experience and his intimate knowledge of Level 3’s customers, employees, and operating environment, Jeff is the right executive to lead Level 3 into the future.” Scott retired from Level 3’s board in early 2013.

“Of all the companies that I cover, the one company where I would have said if there were a change in CEO that would have the most positive impact on the stock, it would’ve been Level 3,” commented an analyst in a poke at Crowe. “The reason for that was, at some point, Jim had just lost control of the company. He’d just become too far removed from the day-to-day operations to really understand what was needed to fix the company.”

Level 3’s stock traded at $42 per share at the time of Crowe’s retirement announcement.

Five years later, in February 2016, Storey took a two-month leave of absence to undergo heart surgery. In October 2016 Storey and I met for coffee in Boulder. This wasn’t unusual, as we would get together about once a year, even if we didn’t have anything in particular on our agenda. This meeting was just a catchup. We talked about our respective medical adversaries—mine cancer and his heart—with me blaming our health challenges on the stress we both carried as we navigated the Bandwidth Boom and Bust.

I told Storey that I recently purchased Level 3 shares, making me a shareholder for the first time in many years. I explained that a recent decline in Level 3’s stock price seemed to me an overreaction to Storey’s earnings call explanation of the challenges Level 3 faced. Storey stared deeply into my eyes before changing the topic. I was confused by his reaction. Though I didn’t know it at the time, the stare was him wondering if I had insider knowledge about a pending major Level 3 announcement.The SEC reviews stock purchases that occurred in the weeks before an acquisition announcement. My name caught their attention as a suspicious stock purchase. They contacted my financial advisor, asking for context. Fortunately, I sent an email to the advisor before making the purchase previewing my buy, citing I believed the stock market overreacted to a statement Storey made in Level 3’s earnings call. They told me so long as I had no inside information, I was free to trade. My advisor shared this email chain with the SEC, and that was the last I heard from them.

On October 31, 2016, CenturyLink, the large regional communications carrier, announced it was acquiring Level 3 in a deal valued at $34.3 billion. The purchase consisted of $10.9 billion in assumed debt, $9.6 billion ($26.50/share) in cash, and 1.4286 shares of CenturyLink stock for each Level 3 share. When the deal was announced, CenturyLink’s shares were trading at $28 per share. The combination of cash and CenturyLink shares meant Level 3 shareholders would receive $70 per share, a 49 percent premium to Level 3’s closing price of $47 before the announcement. Level 3 shareholders would own 49 percent of the combined entity.

Level 3 was born on April Fools’ Day of 1998. It died on Halloween of 2016. I was sad, perhaps because I thought I might be destined to be the CEO of Level 3 at some point.

An original 1998 Level 3 shareholder who held those shares for twenty years and then sold after the CenturyLink acquisition would have gained 87 percent, a paltry 3.1 percent IRR.When Level 3 was launched, its initial value was $2.5 billion, which equated to $5 per share. Adjusting for the 2:1 stock split in 1998 and the 1:15 reverse split that occurred in 2011, this equated to a value of $37.50 per share.

If recipients of these shares held them through to Level 3’s sale to CenturyLink, the value received would have been $70 per original Level 3 share. They would have gained 87 percent during this twenty-year investment hold, a 3.1 percent IRR. However, as we will soon learn, long holders of Level 3, who retained instead of sold their CenturyLink shares, would see their returns turn negative.

In September 2021, Walter Scott Jr. died at the ripe old age of ninety. Though I met him only a few times, he was an inspiration.

In July 2023 James Q. Crowe passed away at the young age of seventy-four. His obituary read,

In the 1990’s, when web pages opened slowly and streaming video over the Internet was not viewed as realistic, Crowe hatched a vision of cheaper Bandwidth that would enable video streaming and the robust Internet experience we enjoy today. Crowe made his vision a reality.

. . . Rather than have data move over traditional telephone networks, he envisioned voice, data, and video moving over a revolutionary new kind of network using fiber optic and Internet technologies. “A network for the eyes rather than for the ears” was how Crowe described it.

Crowe formed Level 3 Communications in 1997 with exactly this vision. Together with his parent company, Omaha-based construction giant Peter Kiewit Sons’, and Kiewit Chairman and Crowe mentor Walter Scott, Crowe raised $15 billion to construct a totally new network based upon the newest technologies and optimized for the Internet. They dug trenches and buried multiple conduits to carry optical fibers across the United States and parts of Canada, digging 16,000 miles along streets and railroads, installing electrical and optical equipment all along the path. They also built a similar network across Western Europe. Level 3 brought Bandwidth costs low enough to stimulate explosive growth in the Internet. Early Level 3 customers such as Facebook and Netflix, among many others, took advantage of these lower costs to create the rich Internet experience the public knows today.

Crowe’s obituary covered his transition from MFS to Level 3.

Crowe launched MFS Communications, the first company to bring robust local competition to the Baby Bells via fiber optic communication technology. He took MFS public in 1993 and built it rapidly into a Fortune 500 company, before it was acquired by WorldCom in 1996 for $14.3 billion.

A year later, Crowe founded Level 3. He was joined by a number of executives and engineers who had worked with him at MFS. His vision and generous nature attracted a loyal following, including but not limited to former MFS employees. American industry has many former Level 3 executives in leadership positions, virtually all of whom regard Jim Crowe as a major figure in their lives.

Count me as one of his loyal followers. He was a major figure in my life.

The obituary ended with the following:

The Smithsonian Institution recognized Level 3 in a large public ceremony for its role in harnessing new Internet technologies to change telecommunications, stating: “Your achievement will inspire others to pioneer, and will provide a record for future generations that wish to understand how information technology changed our world.”

Inspired by the memories triggered by Crowe’s passing, I began to write this book in July 2023, just a few weeks after his passing. In many ways this book is a tribute to Jim Crowe.

Lumen—Glen Post and Jeff Storey#

From the beginning of the book, we identified Lumen as one of the four remaining national Bandwidth Infrastructure companies. Lumen was the rebranded name of CenturyLink. This is the story of how Glen F. Post III turned CenturyLink into the largest operator of Big Bandwidth.

Post earned an accounting degree in 1974 and an MBA in 1976 from Louisiana Tech University. Immediately after graduating, he joined CenturyTel, a rural telephone company headquartered in Monroe, Louisiana, that served customers in thirty-seven states. Post spent his entire career with the business, culminating in a twenty-six-year reign as CenturyLink’s CEO.

“As CEOs go, I would say he’s more understated but very knowledgeable” was how Sprint’s CEO described Post.

“There’s no sharp elbow on the guy,” a banker joked in 2010.

Post had a passion for duck hunting. “During the wintertime, [duck hunting] is his passion,” the CEO of Progressive Bank said. “He’s an avid hunter. He knows how to work the ducks and call them in. He’s leading the hunt, and he’s a great shot.”

In perhaps the most unlikely twist in the Bandwidth adventure, this introverted, smooth-elbowed duck hunter turned his Monroe rural telephone company into the biggest consolidator of the fiber networks.

Before 2009 CenturyTel was a modest-size rural telephone company, with a Market Value of only $3.3 billion. The local telephone companies were struggling with declining revenues and margins. Post’s plan was to get bigger through acquisitions. Sound familiar? This was Bernie Ebbers’s plan when he took over the struggling WorldCom in the early 1980s.

In 2009 CenturyTel acquired its larger rival, Embarq Corporation, for $11.6 billion, half in stock and half in debt. Though CenturyTel was the acquirer, Embarq shareholders owned 66 percent of the combined company. CenturyTel traded at $26 a share when the Embarq transaction was announced. The merged company, which operated in thirty-three states and had revenue of $8.8 billion, was named CenturyLink.

CenturyLink was on the hunt. Qwest, through its merger with U S West, had a sizable traditional telephone business. This certainly played into CenturyLink’s April 2010 justification for acquiringQwest, which cost CenturyLink $22.4 billion—$10.6 billion in stock and the rest in assumed debt.

CenturyLink’s shares were trading at $36, up 40 percent from when Embarq was acquired, which implied a Market Value of $10.8 billion. The merger resulted in CenturyLink shareholders owning 50.5 percent of the combined entity and those of Qwest owning 49.5 percent. CenturyLink became the United States’s third-largest telecommunications company.

“This combination will enhance our ability to deploy innovative IP products and high-Bandwidth services to business customers, expand broadband availability and speed to consumers, and offer superior, differentiated video products,” proclaimed Post.

CenturyLink was both a customer and rival of Zayo. To develop a relationship with Post, I visited Monroe a few times in the 2010s. I’d sit with him in his boring office and have friendly one-on-one discussions on the industry. He was noticeably introverted, coming across as less sophisticated and far nicer than other telecom executives. I doubted he spent much time in front of high-tech customers. I surmised his comfort with technology was low. He was, nonetheless, a fine Southern gentleman.

I didn’t view CenturyLink as an acquirer of Zayo, though in hindsight perhaps I should have. I suspect he was sizing up whether Zayo or our crosstown rival, Level 3, should be on his acquisition wish list.

Level 3 turned out to be his target. CenturyLink closed its acquisition of Level 3 in November 2017. The Wall Street Journal, in its article titled “Telecom CEO’s Deal-Making Puts Louisiana Town at Center of Internet,” was ready with dramatic words.

When Glen F. Post III took the top job at CenturyTel in 1992, the first website was little more than a year old, IBM computers dominated the workplace and mobile phones stood nearly a foot tall.

Some 24 years later, the internet and cellphones have supplanted phone lines as the telecommunications industry’s main businesses, pushing many regional players into the arms of bigger rivals. But Mr. Post still leads the Monroe, La., company, now called CenturyLink, and is vying to turn it into one of the biggest internet providers in the world.

The 64-year-old executive is an unlikely skipper in the ego-charged media and telecom sector. He still lives in the small town of Farmerville, where he grew up and which is a half-hour drive from CenturyLink’s headquarters complex on Monroe’s outskirts. People who know him say he likes to hunt ducks, doesn’t drink and rarely raises his voice.

“He’s just a country boy at heart,” said a former executive. . . . “He knows where he came from but he also knows that he runs the largest company in Louisiana.”

More than that, CenturyLink is poised to become one of the world’s biggest internet carriers by adding Level 3 Communications, which has customers in more than 60 countries and thousands of miles of fiber-optic cables spanning four continents.

Not featured in the article was that CenturyLink’s stock price eroded from $36 per share at the time of the Qwest transaction to $28 per share when the Level 3 acquisition was announced and fell again to $20 a share when CenturyLink closed its acquisition a year later.

CenturyLink’s stock price decline lowered the acquisition price of Level 3 from $34.3 billion to $30.3 billion, implying Level 3 shareholders were receiving $57.50 per share instead of the $70 per share at the time the acquisition was announced.

Recall that Keith Meister was with me when his mentor, Carl Icahn, fell off his chair at Icahn Enterprises. He left Icahn to start Corvex Management, which specialized in activist investing. In May 2017, with the merger still months from closing, Meister disclosed he had accumulated 5.5 percent ownership of CenturyLink. In true activist fashion that would have made his former boss proud, he had a demand. He wanted Glen Post to accelerate his retirement and immediately hand the CEO reins to Jeff Storey. The transaction hadn’t yet closed!

“Execution has been substantially weaker at CenturyLink than at Level 3 for many years,” Meister said at the Ira Sohn conference in New York City. “Would you pay a premium to buy the New England Patriots and then not start Tom Brady?”

Hey, Storey. No activist investor ever said anything nice about me.

This pressure from activists, alongside a continued slide in CenturyLink’s stock price, hastened the transition of the CEO position. Storey became CEO on June 1, 2018, seven months earlier than planned.

In many ways the CenturyLink-Level 3 combination can be viewed as a reverse merger, with Level 3 being the surviving company. Storey was CEO, Patel was CFO, the executive team was mostly legacy Level 3 executives, and Colorado was the headquarters. It only lacked the name Level 3.

The collection of assets under CenturyLink was, and still is, astounding.

• The original CenturyLink
• Qwest by CenturyLink
• U S West Communications via the merger with Qwest
• Level 3
• Global Crossing via Level 3 acquisition
• Broadwing via Level 3 acquisition
• WilTel 2 via Level 3 acquisition
• Genuity via Level 3 acquisition
• BBN via Level 3’s acquisition of Genuity
• tw telecom via Level 3 acquisition
• Xspedius via Level 3’s acquisition of tw telecom
• GST via Level 3’s acquisition of tw telecom
• TelCove via Level 3 acquisition
• ICG Communications via Level 3 acquisition
• Progress Telecom via Level 3 acquisition
• Looking Glass via Level 3 acquisition
• Embarq by CenturyLink

As a co-founder of Level 3, I felt pride. I also had jolts of jealousy that I wasn’t part of the Level 3 victory lap.

As CEO of Zayo, I had mixed feelings about the merger. On the positive side, consolidation was a key part of Zayo’s thesis. As the industry reduced to a handful of national platforms, the supply-demand balance would shift in favor of suppliers. Moreover, the merger left Zayo as the leading independent provider of Bandwidth Infrastructure.

On the negative side, I was intimidated by the sheer vastness of the assets under Lumen. If Lumen could get this behemoth under control, it could smash the rest of us. Then I smiled—Lumen is far more likely to be an utter mess than a fine-tuned machine.

Storey had a chance to put an exclamation point on the reverse takeover in September 2020 when CenturyLink changed its name. However, instead of Level 3, Lumen Technologies was introduced as the new brand. “Yuk” was my reaction as I yawned at the bland name.

Lumen CFO Patel resigned in September 2018. Storey retired in September 2022, with the stock price down to $10 a share.For those of you keeping score, the hypothetical person who held their original Level 3 share, which had a cost basis of $37.50 per share, would have a value of $53.50 per share, or 1.7 percent IRR, to show for their twenty-one-year investment. The $53.50 per share came from $43.50 per share in cash received from CenturyLink, plus the $10 per share of CenturyLink stock.

Industry outsider Kate Johnson became Storey’s successor. She spent four years at GE before leaving to join Microsoft as president of North America. She left Microsoft in 2021.

I crossed paths with Kate Johnson in 2013 when she was an executive vice president at GE. As we prepared to take Zayo public, I sought independent directors for the Zayo board. After a few phone calls followed a banker introduction, Johnson and I were mutually interested in her taking the next step. Then Johnson abruptly pulled out. She told me her CEO, Jeff Immelt, blocked the idea and wanted her to focus on her responsibilities at GE.

Some ten years had passed since my interaction with Johnson. Now she was expressing unbridled optimism about joining Lumen and its mission. “I’m looking forward to leading this great company through its next chapter and helping customers leverage the Lumen platform to power amazing digital world experience.”

Johnson’s first job was to stave off a Lumen bankruptcy. The $10 per share stock price eroded quickly, dipping below $1 a share in September 2023, her one-year anniversary.Okay, one more time we will visit our stubborn holder of an original $37.50 per Level 3 share. Their return is $44.50 per share, or 0.8 percent IRR. At least they didn’t lose money.

This didn’t stop Johnson from conveying confidence in Lumen with her pocketbook. In November 2023 she bought $1 million worth of Lumen shares, explaining, “I believe deeply in our strategy, our mission, the team that we’ve built and our progress so far, and so I went long in the stock. . . . I decided that this is the right thing to do, and I think it expresses my deep confidence in our business.”

The problems Johnson took on at Lumen are deep rooted and include operational deficiencies, legacy business overhang, and complex indebtedness. It might take five or more years—and perhaps a visit through Chapter 11—for Lumen to regain momentum. Still, the sheer assets buried in the Lumen platform should ensure its major player industry status for the duration.

Zayo—Dan Caruso#

Zayo’s origin began in the wake of the ICG 2006 exit. I had been recovering from double hip replacement surgery. To pass the long days, I googled fiber companies and reached out to their CEOs. Drawing on this dialing and discussion with CEOs, and my own very personal and qualified introspection on the state of the industry, the premise for Zayo emerged.

First, I noted the Insatiable Demand for Bandwidth would remain true for multiple generations to come. The daily widespread use of the Google search engine and Google Maps, the monumental adoption of streaming, and the continued expansion of cloud services and data centers were the most visible points of proof. Second, I explained that the problem was not a fiber glut; it was Too Many Fiber Providers. Too many fiber rivals fought one another for a finite set of revenue opportunities. Third, Consolidation would bring supply-demand balance, leaving the consolidated platforms that controlled the vast majority of fiber assets to flourish.

Fourth, I made the case that there was Too Little Fiber. As Bandwidth grew and use cases expanded, the sheer explosion in usage meant fiber would come to be woven into an interconnected fabric. Big customers and data centers would need a large quantity of fiber to handle burgeoning volumes of digital traffic that would pass among their facilities. And fiber demand would extend to small buildings, homes, and cell towers. The Internet of Things would lead to everyday devices such as farming equipment, vehicles, and watches being connected, driving more and more Bandwidth use cases.

Fifth, I suggested that Now Was the Time to Invest. The crash was so extreme and painful that most investors were ferociously determined to avoid fiber investments. To those who would listen, I likened it to a tequila hangover: “Remember your first overindulgence of tequila? You swore you would never touch tequila again. It took years before you took a sip again, realizing it wasn’t the tequila. It was the pace, quality, and quantity of tequila you drank,” I explained. I saw a window of opportunity to buy fiber properties at undervalued prices.

Sixth, I identified the unique post-Bust time in our industry. The upheaval of the 2000s brought an abundance of subscale forgotten fiber companies. I called them Fiber Orphans. The Fiber Orphans were owned by individuals, investors, or companies that weren’t long-term investors. I termed these investors Accidental Owners. Some acquired the asset as a spin out of a distressed division of a bigger company. Others purchased the property through a bankruptcy. Still, others were financial owners turned Bandwidth operators as their CEO flamed out. My view: most would be eager for an exit.

Seventh and last, I observed that Accidental Owners ran tightly focused businesses. These businesses were laser focused on delivering Bandwidth solutions to customers using vast quantities of Internet to drive their own customer success and growth. When we launched Zayo, we coined the term Bandwidth Infrastructure to describe the business model.

This term was also personal to me. I would prove to myself, and to anyone in the industry who cared, that a Bandwidth Infrastructure business could be operated in a way that authentically created great outcomes for its investors.

Backed by my ICG sponsors, ColCap and M/C Partners, weJohn Scarano was my co-founder. Other key members of the founding team included Sandi Lewis, Matt Erickson, Marty Snella, Tim Gentry, Chris Murphy, and Scott Beer. Key executives who joined us a year later were CFO Ken desGarennes, Chris Morley, Fritz Hendricks, Glenn Russo, Hannah Wanderer, and Jason Tibbs. lined up a $225 million Series A and went hunting for Fiber Orphans.

Learning from past lessons of overzealous spending, we were frugal. Compensation was low—my salary, for example, was the minimum necessary to qualify for medical benefits. We were generous with stock options, firmly aligning management’s interests with those of our investors.

We launched Zayo from a small office, which ironically was being paid mostly by Level 3, thanks to a sneaky move I pulled when we sold ICG to Level 3. We had been using a small office on Pearl Street in Boulder at the time for ICG and other purposes. This lease was in my name. As we were negotiating with Level 3, my team wrote a sublease that enabled ICG to lease half the space from me for 80 percent of the rent. With Level 3’s campus ten miles away, the only Level 3 employees who would use the facility were legacy ICG executives, most of whom joined me for the Zayo adventure.

From our side of this small office, Zayo was born and would grow up to become Level 3’s greatest rival. Was I driven by the opportunity to prove Level 3 wrong? To some degree, we all were, though most, if not all, of us were just having fun.

As we launched Zayo, blogging became a thing. Crowe’s lesson about the Internet was burned into my consciousness. So I pledged to always stay current on the latest Internet-enabled trends.

I began blogging. And I gave more consideration to “the Bear,” a nickname I was given while at Level 3. The nickname wasn’t meant to endear me to colleagues. Fur sure. I was not a cuddly bear. I was more the grizzly startled awake from a deep hibernation. A whole lexicon rose around me. You’re poking the Bear. Spray honey on your unsuspecting colleague to distract the Bear. Don’t mess with the Bear’s “Cubs,” paying homage to my inner circle.

I embraced the Bear moniker, even naming my blog “Bear on Business.” Like MFS’s Royce Holland, howling in the trade rags in the early 1990s, I used Bear on Business and roared of Zayo’s intentions to consolidate the industry.

We started great, acquiring multiple companies in our first year.Our first three acquisitions were in Tennessee, Pennsylvania, and Indiana. We paid $9 million for Memphis Networx, an underutilized two-hundred-route-mile metro network that was a joint venture with the power utility and the Memphis business community.

PPL Telcom was a power utility spin out run by an industry veteran who treated it as a cushy semiretirement job. We paid $46 million and gained four thousand route miles of metro and regional fiber.

Indiana Fiber Works was a statewide fiber network that had metro networks in most of the major cities, including Indianapolis. We paid $22 million for it. Then in 2008 subprime mortgages led the financial markets into a tailspin. Bear Stearns narrowly avoided collapse that March when J.P. Morgan Chase acquired it. In September Lehman Brothers, which had gotten the ball rolling downhill, escaped luck and went bankrupt. An international debt crisis was in full force. The US government concluded the banks were too big to fail, so it spearheaded a bailout. The Great Recession hit just as Zayo was entering kindergarten. Was our timing bad, or was this an opportunity?

CIT Group was one of our major lenders. We met in their NYC headquarters on our quest to raise debt to fund an acquisition. As we pitched our plan to a room full of bankers, few questions were asked, and no overt reaction was offered.Thomas Westdyk and Joe Jenda were the two CIT bankers who supported Zayo. Among our memories is an after-midnight Ping-Pong game at the Standard hotel in NYC’s Meatpacking District. Those were fun times. The mood was somber.

We learned the next day that the CIT team was anticipating mass layoffs. Instead, they received approval to provide the loan to Zayo. We were CIT’s first post-crisis transaction that the bank approved, and this became a clear signal to the CIT team that CIT would get through its existential crises.

During my ICG stint, I made a habit of extending my business travel for networking. When in Boston, I looked up Charlesbank and reached out to Michael Choe. We had a fancy breakfast together at Boston’s Four Seasons hotel. We hit it off.

Choe was young, intelligent, curious, and ambitious. He was easy to spend time with. Though his firm had experience in telecom and tech, most of Charlesbank’s investments were growth equity in traditional companies.

“Maybe we will find something to do together down the road,” we both concluded.

When the mortgage crisis hit, Zayo had great momentum but was running out of dry powder for more deals. I reached out to Choe, who saw this as an opportunity. “Zayo is poised to accelerate its rollup in an environment where owners will be anxious to sell and other investors will be fearful to buy.” Charlesbank led our Series B, providing $128 million of additional dry powder to continue our rollup. Morgan Stanley also participated in the Series B.

In our first five years, we completed over twenty acquisitions and gathered fiber assets scattered throughout the United States. Among my favorites were Onvoy,Minnesota-based Onvoy was one of my favorite acquisitions, solely because of the friendship I developed with their COO, Fritz Hendricks. From the moment I met Hendricks, I knew he was special. He was exceptionally intelligent, could go toe-to-toe with any telecom CTO, and his business acumen was extraordinary. Hendricks ran the business even though someone else held the CEO title.

Zayo purchased Onvoy for $72 million, and our focus was primarily the Bandwidth business. We noted, however, that Onvoy had an underappreciated wholesale voice business with durable revenue and cash flow. Hendricks detangled the Bandwidth business, which was combined with Zayo, from the wholesale voice business. Hendricks ran the wholesale voice business using the Onvoy brand.

Onvoy became the gift that kept on giving. Hendricks steadily grew revenue and consistently delivered cash flow. Eventually, one of our investors bought Onvoy Voice Services. Zayo’s overall return on Onvoy easily exceeded four times. Thank you, Fritz. AGL Networks,AGL Networks was a favorite for two reasons. One, it was primarily a Dark Fiber business, which gave us a full appreciation of the strength of the Dark Fiber business model. Second, it was how we won the deal. On the last day of bidding, our CFO, Ken desGarennes, told us we were outbid. When I pressed him on how much, he went back to the bankers and twisted their arms. We raised our bid $1.2 million and agreed to sign within twenty-four hours.

My phone rang. A CEO friend with limited acquisition experience was seeking my advice. “But before I do, I need to ask you a question. Did you execute a deal to purchase AGL Networks?” I answered carefully, “No, I did not execute an agreement to purchase AGL Networks.” I had not yet signed it, so my answer was technically true. She went on to tell me that they had the deal locked up, and then, while routing for final approval, they were outbid by $0.5 million. “It’s almost like they knew what we bid. Is there anything we can do?” she asked.

We quickly signed. Nice job, Ken! and American Fiber Systems (AFS).

AFS’s CEO, Dave Rusin, was previously the president of Rochester Tel, later rebranded as Frontier. His LinkedIn profile lists his accomplishments as having “transformed the 125-year-old telephone monopoly into the 1st open market local carrier in the world” and “Catapulted Frontier Communications to be the 4th largest telecommunications company in the US.” It’s his LinkedIn, so he is entitled to embellish.

Rusin’s clone was Vizzini, the bumbling, bully, mastermind thug played by Wallace Shawn in The Princess Bride. Rusin was not a fan of mine, showing frustration as he watched me raise money and acquire fiber companies. “He stole my idea,” he must have told his investors.

Eventually, I convinced his largest investor, Jeffrey “Jeff” Drazen, who represented Sierra Ventures, to sell AFS to Zayo. When I held an AFS all-employee session, Rusin had his HR lead ask three questions, submitted anonymously in true Vizzini fashion.

The first was, “We understand Level 3 had a lot of problems when you were there. Did Level 3 get on track after you were fired?” I told them Level 3 was now doing fine.

The next question was, “AFS has a great brand in the industry with a name that captures its Bandwidth mission. Zayo is a complete unknown with a name that stands for absolutely nothing. What will the name of the combined company be?”

“Zayo,” I answered.

Then the third diabolical question came. “AFS is led by a CEO that has an incredible track record as a longtime industry CEO. You have far less experience and a questionable track record. Who will be CEO of the combined company?” I answered that I would be the CEO without feeling a need to justify.

AFS, which had accumulated metro fiber assets in the rising tech markets of Boise, Marietta, Las Vegas, Minneapolis/St. Paul, Nashville, and Salt Lake City, was a great acquisition for Zayo.

AboveNet had grown steadily under Bill LaPerch’s leadership post meltdown, exploiting the incredible assets that were built during the Boom times. That was when LaPerch decided to explore a take-private transaction in which management would co-own the company alongside private investors.

In late May 2011, the financial press caught wind that AboveNet hired investment banker JPMorgan. AboveNet was in play!

In June 2011 the New York Post published “NY Fiber Firm Buy in Works,” reporting AboveNet “has been shopping itself for several months, received a binding offer in the last few days from a private-equity firm . . . [and] has been asking for a minimum bid of $80 a share.” At the time AboveNet was trading at $73 per share, a 71 percent gain in the past year. The New York Post added, “[S]ources believed it would be a challenge to get anyone to meet that price.”

Hmmm. Opportunity was knocking hard at my door.

My instinct was to insert Zayo into the process, knowing that as a public company, AboveNet could not ignore our expression of interest. I contacted LaPerch and asked for Zayo to be included. LaPerch went to his board and informed me that he could not respond to market rumors but that they would consider an offer assuming we had appropriate financial backing. I didn’t have the dinero at the time; there wasn’t much I could do.

We learned later how the bidding war played out in 2011—and how close AboveNet was to being acquired in early 2012.

Jan: JPMorgan presented to AboveNet’s board that the prospects were high that AboveNet could be sold at a premium value to its stock price.

Feb: JPMorgan was engaged to explore with an eye toward an exit.

Mar: Five Private Equity firms submitted indications of interest at prices of $71–$80 per share. The three highest bidders were invited to engage in diligence.

Apr: A sixth Private Equity firm requested permission from AboveNet to speak to Zayo about a joint bid. AboveNet denied its request.

On the same day as my call to LaPerch, a CEO of a public company expressed interest and received permission to participate in the AboveNet process, but this bidder withdrew from the process in June.

Later in April a third CEO reached out to JPMorgan, only to withdraw in May.

Interest in AboveNet grinded on. In May AboveNet provided draft merger agreements to the three Private Equity firms and one of the strategic bidders. This latter bidder offered $85 per share, of which 30 percent would be in the form of shares of its stock. Yet another strategic bidder reached out to JPMorgan to express interest in AboveNet and submitted a bid for $80 per share.

On June 11 a financial bidder submitted a bid at $74 per share. The board rejected the offer as inadequate. Both of the strategic bidders lost interest. By November the board concluded it was time to move on and ended the process.

LaPerch watched as Zayo gobbled up more than a dozen fiber properties. Despite AboveNet having a fifteen-year head start, Zayo had become nearly as big. With the take-private process now terminated, LaPerch, who shied away from M&A, was ready to join in the consolidation game.

In October 2011 Reuters published an article titled “AboveNet CEO Keen to Make His First Acquisition,” quoting LaPerch: “It wouldn’t be out of the realm of reality for us to make an acquisition if there is a good strategic reason to do it, and it makes good financial sense.”

LaPerch set his sights on 360networks.

Unfortunately for LaPerch, I had been laying the groundwork with 360networks for years. Between 2008 and 2011, I visited Greg Maffei once a year at Liberty’s Denver headquarters to see if he was ready to sell 360networks. I also checked in with his executives Rick Coma and Chris Mueller twice a year. 360networks’s assets were concentrated on the West Coast and would make an ideal complement to Zayo’s growing Pacific Northwest regional network.

In 2011 my persistence paid off. Maffei’s team approached us and said they were ready to sell. We worked on an agreement. Then as we were approaching signature, AboveNet emerged, determined to outbid us. Despite AboveNet’s Hail Mary bid, 360networks picked Zayo as its dance partner. Our M&A track record gave Maffei confidence that we would close without any hitches.

In 2024, LaPerch shared with me his inside story. “Zayo and AboveNet coincidentally ended up with the same final bid. When I found out, I called Maffei and offered him $10 million more. I still remember his response. ‘Bill, you run a great company and get great returns on your organic investments. Dan Caruso has done sixteen acquisitions, and I feel more comfortable that a sale to Zayo will close quickly. I am going to take the Zayo offer, even though it’s less.’ That one really hurt me.”

The $318 million price exhausted our cash resources, but my coveting for AboveNet only intensified.

Zayo was rolling. In 2011 my investors were ready to take Zayo public. A 2012 exit would have been lucrative. Investors were five times in the money and quite eager to cement an outcome. But I wasn’t on board. And my vote trumped all of theirs; Zayo needed me as its CEO to ring the NYSE opening bell.

While all this was going on, it became clear to me that to continue with our consolidation, we needed more cash. My investors were tapped out, as most of them had already invested their maximum. Despite being unable to invest more, they were reluctant to welcome in a new investor, as this would require a meaningful additional voice in the board room, thereby complicating governance. A new investor would also reset the investment clock, as time would be needed for their investment to grow in value before an exit.

We compromised. My syndicate gave me the opportunity to find a Series C lead, but we’d need to strike a balance on governance and exit time frame.

On the hunt for a Series C lead, I accepted an invitation from Stephens, a boutique investment bank in Little Rock, Arkansas, to attend its annual TMT conference. My assigned seat at dinner was next to Phil Canfield, a senior partner at GTCR in Chicago. We struck up a conversation, during which Canfield explained GTCR’s approach: “Each January we select four macro themes that will guide our investment strategy for the year. We then identify the best platform in which to execute each theme.”

Canfield, I learned, was also a University of Chicago MBA. His analytical approach resonated. He continued, “Fiber infrastructure was the leading theme for GTCR this year. After a few months of research, we identified Zayo as the best platform to execute on this theme.”

I’m not the fastest swimmer in the pool, but I caught on that it wasn’t a coincidence we were sitting next to each other. Canfield told me of GTCR’s success in sector rollups and explained its leader’s strategy: “All PE firms give lip service to the importance of the CEO. At GTCR, we learned the CEO is by far the most important factor in value creation. We only back the most capable CEOs.”

I enjoyed my ego being stroked.

Over the next few weeks, we solved the governance and exit dynamic and entered a handshake agreement with GTCR for a multihundredmillion-dollar Series C. Zayo had our third hunting license.

Canfield asked me which fiber company we wanted to target. I answered AboveNet. He responded, “I was hoping you’d say that.”

Armed with more ammo and AboveNet in my crosshairs, I headed to Miami’s South Beach to attend Metro Connect, one of the last remaining annual industry conferences from the Boom era. Since the launch of Zayo, I leveraged this annual conference, which was held at Eden Roc in March, as a personal hunting ground to spread the word on Zayo’s ambitions.

The first year I went was 2008. It was fun, with CEOs from many of the Fiber Orphans in attendance. A few investors and bankers also showed up, but overall, attendance was sparse.

The subsequent year I hosted my first annual invitation-only after hours at the Forge, a trendy wine bar in South Beach. Handpicked CEOs, investors, and bankers were invited in advance, which drove up attendance at the conference. Soon, the after-hours invite was seen as a golden ticket.

I began giving the keynote address as the kickoff to the conference. Instead of giving flowery updates on Zayo, I gave thought-provoking speeches to create a buzz. Examples were “Reflections of a Serial Entrepreneur,” “Telecom’s Boom, Meltdown, and Resurgence,” “Batman versus Superman,” and “Reflections of an Anxious Chairman.”

The most infamous experience was when I plopped my wallet on the table during a panel discussion. My spontaneous reaction, with Bill LaPerch sitting next to me, was the first in a series of steps that rapidly culminated in Zayo’s acquisition of AboveNet. Here is how it played out.

I wasn’t the only one who enjoyed the energy of Metro Connect. LaPerch enjoyed its resurgence as much as I did. AboveNet was the conference’s most prominent company attendee; its metro networks were the envy of us all. Court would be held as Bill sipped whiskey at the bar. Vendors sought to sell him equipment, carriers wanted access to his fiber, and bankers pitched to be his advisors. Plus, LaPerch was friendly, witty, and easy to be around.

The featured panel to kick off Metro Connect was the fiber big dogs offering their predictions for 2012. John Purcell, the CEO of Fibertech Networks, was closest to the moderator.John Purcell spent thirty years at Rochester Telephone, which rebranded to Frontier in the 1990s. In 2000 Purcell partnered with colleague Frank Chiaino to launch Fibertech. Their simple strategy was to be the underlying fiber infrastructure for carriers and Internet providers. Undeterred by the Bust, Purcell steadily built Fibertech and created a fantastic outcome for his investors, selling to Lightower in 2015 for $1.9 billion. Purcell, among the most likable and competent executives in our industry, passed in 2017 at the young age of seventy-three. I was in the middle, and LaPerch was to my left. Purcell and LaPerch were the two most respected statesmen of the industry; me—not so much so. I was the corporate-raiding interloper. The room was packed with over one thousand analysts, bankers, and fiber executives.

The first question went to Purcell, the softball the Metro Connect crowd was hoping for. “John, a lot of consolidation activity has accelerated over the past two years, much of it driven by the guy to your left. What do you think will happen this year?”

Purcell was both articulate and entertaining. He began dryly, “I don’t know why you posed that question to me” and explained how Fibertech has grown 100 percent organically. “I don’t even understand how acquisitions work.”

Turning his wit toward me and touching my shoulder, he claimed to have no idea how I’ve convinced my investors to go on such a wild spending spree. “It appears everyone in the room will eventually be bought by Zayo, and we will all work for Dan someday. I keep waiting for him to drive his dump truck to Rochester and share that green with me.”

His eloquent ramble then segued to Zayo, which, according to his math, was unfortunately out of dry powder. He must have had a banker do some work because he cited the size of the prior round, the outlays on acquisitions, and our debt ratio: “Unfortunately, Caruso’s wallet is now running on empty.”

Instinctively, I reached into my back pocket. He couldn’t see me, as he was turned to the audience. I pulled out my wallet and dropped it on the coffee table in front of us. When it was my turn, I declared, “Don’t you worry, John. I have plenty of dry powder.”

Several of my investors were in the audience, and I spotted them wincing at my wallet drop. The rest of the audience howled, as did Purcell when he pieced together what just happened.

LaPerch chimed in, “Dan that is only a wallet. You are going to need a wheelbarrow of wallets if you are interested in AboveNet.”

As I dropped my wallet, my attorneys had been putting the final touches on an offer letter for Zayo to acquire AboveNet. I asked LaPerch to meet with me on Metro Connect’s final day.

The next day, the final day of Metro Connect, we sat near the pool. LaPerch seemed unusually nervous. I got right to the point. “Bill, Zayo is making an offer to buy AboveNet for a healthy premium over its stock price.”

To my surprise, LaPerch was ready with an answer. “Dan, I appreciate your interest and respect you for your industry leadership. However, my board would be uncertain on how to value your equity, and given the quality of AboveNet’s assets relative to Zayo’s, we would, of course, place a much higher multiple on our profitability than yours.” He was right on the comparative quality of our respective assets.

I caught on to what was happening. LaPerch was ready for the conversation but was coached that we would propose a merger where some or all of Zayo’s purchase price would be in the form of stock in the combined public company.

I answered, “We are offering 100 percent cash. We have the equity and debt fully committed. We can get through diligence and be ready to sign the deal by late March.”

I dropped a manilla envelope on the table and slid it toward him. “The offer is in this envelope. Feel free to open it here, or you can take it with you to open it later.” He sat quietly for a minute. He didn’t have any questions. He politely said he would get back to me, leaving the envelope untouched.

Within an hour LaPerch texted me and asked for the envelope to be delivered to his hotel room.Glenn Russo, who was part of my Zayo executive team, had the task of delivering the envelope to Bill LaPerch’s hotel room. After sliding it under the door late in the evening, he panicked, wondering if he had the room number right. Russo texted me that evening, but I didn’t see it until the next morning. He recalled the sleepless night he had. When LaPerch opened it, he saw an all-cash offer backed by debt and equity commitments for $80 per share.

The next day we heard back from AboveNet’s general counsel, requiring us to sign a confidentiality agreement that included a standstill provision as a condition to having further discussion. A standstill outlines specific restrictions on the potential acquirer’s ability to take certain actions such as launching a hostile takeover bid or engaging in other aggressive actions. Requiring a standstill before any conversation was certainly an aggressive response.

We concluded we had little choice but to comply, so we agreed.

On March 4 AboveNet’s banker, JPMorgan, provided us with a draft merger agreement and access to a data room.Marco Caggiano and Fred Turpin from JPMorgan were AboveNet’s bankers. They set a deadline for us to complete diligence, return a markup of the merger agreement, and submit our bid along with signed debt and equity commitments by March 11, 2012. We would have one week to complete a transaction to buy the multibillion-dollar public company. This was unprecedented.

When we pushed back on the crazy tight time frame, JPMorgan’s answer was, “If you don’t want to proceed forward as a result, that choice is available to you.” No doubt the response was scripted. But why?

We learned later that AboveNet was hours away from completing an LBO with Providence Equity as the sponsor. Providence reapproached LaPerch in December 2011, expressing a renewed interest to acquire AboveNet. Immediately after the 2011 holidays ended, a fast-track process to take AboveNet private picked up steam.

Jan: Providence offered a price range of $75 to $80 per share. Later in the month, they firmed up its price to $77 per share.

Feb: JPMorgan was reengaged to represent AboveNet. A counteroffer of $79 per share was provided to Providence. Providence increased its bid to $78 per share. AboveNet provided Providence with a draft merger agreement. Providence responded with a markup of the merger agreement. AboveNet responded that the markup was unacceptable and would allow the exclusivity agreement to expire on February 27.

On February 23 Providence received approval from its investment committee and expressed a willingness to show more flexibility on the terms.On February 29 Providence submitted a revised markup of the merger agreement, addressing many of AboveNet’s concerns.

My meeting with LaPerch and delivery of our all-cash offer for $80 per share was March 1, the day immediately after they reached agreement with Providence! Though accidental, our timing could not have been better.

This wasn’t good news for the AboveNet team. Providence would have retained the management team, giving them the opportunity to continue to run the platform. The recapitalized AboveNet would have dry powder to do acquisitions. Our offer, even though higher by $2 per share, was not a welcomed consolation prize. They were at the one-yard line of a management buyout, and I was interloping on LaPerch’s parade.

As a public company, though, AboveNet couldn’t just shoo us away.

AboveNet’s management, including LaPerch, made themselves available to meet with us but only for a limited amount of time. We flew to New York and met the AboveNet team in a private hotel room. LaPerch had his GC, COO, and CFO with him. I had Ken desGarennes, along with a couple of our investors and investment bankers.

We also had a conference bridge open, where we had a nearby war room of twenty-five Zayo executives complimented by the deal teams of our investors. They poured through AboveNet’s online data room and listened in as we asked our questions, some of which they prompted via texts to desGarennes.

Joe Valenti from Barclays, one of our investment bankers, recalled the diligence session. “The meeting tone began to shift to probing for reasons not to do the deal. You called a side bar and told everyone from our team to refocus, stressing the need to see the forest through the trees. ‘Acquiring AboveNet is a slam dunk from an industrial logic and a value creation perspective. Let’s shift our focus on how to get it to the finish line.’ It was a great leadership moment”

LaPerch and his team politely answered our questions. As we approached lunch, LaPerch excused himself, saying, “I think my team can handle the rest.”

We prepared a one-hundred-page diligence report for our investors. However, the premise was simple. We were paying $2.2 billion, which represented a tenfold presynergy Profitability multiple. Its Profitability margin was 44 percent, which we were confident we could get to at least 55 percent. AboveNet had 20,600 miles of the absolute best metro fiber assets serving four thousand customer buildings including most datacenters in the most important geographies. When combined with ours, its assets would be even more valuable. The icing on the cake was AboveNet’s stellar customer base.

The lengthy diligence readout was not needed to be enamored with this deal. However, the comprehensive deck paved the way for rapid approval by our investors.

We didn’t quite realize we were in a bidding war, though we knew something was amiss, which made us thoughtful in each move. We hadn’t sniffed out that AboveNet was so close to a management buyout backed by Providence.

On March 12 Zayo submitted a markup to AboveNet’s proposed merger agreement with a confirmation of its $80 per share price. The next day AboveNet’s leadership reported to their board that Providence was making progress on reducing the number of open issues in the purchase agreement, and except for price, Providence’s terms were more favorable than those of Zayo. To force Zayo’s hand, AboveNet provided us a one-day deadline to respond to whether Zayo would accept AboveNet’s revised agreement and, if so, at what price. Zayo’s advisors pushed back, saying they would not respond unless AboveNet provided clarification on price and other value-related terms.

On the following day, March 14, AboveNet’s attorneys resolved most of the remaining outstanding issues with Providence and reported to their board that the agreement was nearly ready to be signed. The board instructed JPMorgan to communicate that Zayo must provide its best price and terms and that if Zayo failed to respond by 7:00 p.m., AboveNet would cease negotiations.

We still were without a clue that we were in a real-time bidding war.

At 7:30 p.m., Zayo provided a revised markup and increased the price to $81 per share. The message sent by increasing the price by $1 was that we had more upward flexibility; the uncertainty about how much we’d be willing to pay prevented AboveNet from being able to conclude that another deal was superior.

AboveNet’s lawyers continued to negotiate with Providence in an attempt to resolve the remaining issues. A final draft of the purchase agreement would be ready later that evening. The board instructed JPMorgan to inform Providence of the existence of an unsolicited offer at a price of $81 per share. Note that AboveNet still was silent with us about another bid; by sharing our bid price, they were clearly steering the deal to Providence.

AboveNet also reported to the board that Zayo’s markup resolved most of the issues but still had less favorable go-shop and breakup fee provisions. The board instructed JPMorgan to express disappointment in Zayo’s proposed terms.

We sensed AboveNet was looking for an excuse to kill our deal and knew they were running out of reasons to do so. We concluded we needed to remove this final objection. On March 15 we conceded the go-shop and breakup fee provisions. This prompted JPMorgan to plead with Providence that it needed to increase its bid, or it would lose the deal to another bidder.

Providence increased its proposed price to $78.50 per share and communicated that this was its best and final offer to AboveNet. We were told later that Providence simply didn’t believe that another bidder was at the finish line with a higher bid. They feared they were being tricked into bidding against themselves.

AboveNet communicated to Zayo that it would enter a transaction with Zayo at a sale price of $84 per share and that it would require a response by the next day, March 16, at 5:00 p.m.

On March 16 Providence signed the merger agreement and set a deadline of March 18 for AboveNet to countersign. Unbeknownst to us, any misstep by Zayo would have allowed AboveNet to complete the management buyout with Providence.

Just before the March 16 at 5:00 p.m. deadline, Zayo informed AboveNet that we were prepared to accept the $84 price and were ready to execute the merger agreement. We were the highest bidder, and AboveNet, whether its management team liked it, was obligated to accept our deal. On March 18 Zayo and AboveNet executed the merger agreement.

On the morning of March 19, Zayo’s acquisition of AboveNet was announced, just seventeen days after I first delivered the unwelcomed envelope to LaPerch at the Eden Roc pool in South Beach, Miami. I suspect this is a record pace for a multibillion-dollar public company hostile acquisition.

In 2024, I learned from LaPerch that Craig McCaw, whose original investment in AboveNet traced back to 1997, remained a shareholder through its sale to Zayo. According to LaPerch, McCaw made a thirteen-times return on this fifteen-year investment.

In the two years after AboveNet, we completed several more acquisitions,A favorite during this period was Fiberlink LLC, which had a fiber and conduit route that connected Denver to Chicago. This link was critical as we slowly assembled a nationwide fiber network. Chris Jensen, who ran Fiberlink, became a good friend. including multiple in Europe that complemented the AboveNet assets.We purchased GEO, a fiber network that covered the UK and Ireland; NEO Telecoms in France; and Viatel Technology Group that had a fiber footprint tying together the major cities in western Europe. Each of the acquisitions bolstered the depth and reach of Zayo’s increasingly impressive collection of fiber assets.

With the success of our acquisitional hunt, we were ready to enter prime time. Those who chose sports as a career aspire to make the NFL or NBA. Career politicians aim for a governorship, Congress, or the White House. Entertainers strive for an Oscar or a Grammy. For CEOs, the equivalent is taking a company public on the NYSE. It was time to reward our early investors with liquidity. Management, too, was ready for a payday. It was IPO time for Zayo.

We had our IPO kickoff meeting in early 2014. Several dozen bankers, attorneys, accountants, and Zayo investors filled the room.Our IPO investment banking team was led by Jason Rowe of Goldman Sachs, Jon Yourkoski of Morgan Stanley, and Joseph “Joe” Valenti of Barclays. First on the agenda was for me to give the Zayo story, noting that most in the room were familiar with it.

To break the ice, I told the following story.

My mom belongs to a church group. The first Tuesday of every month, they meet to share their life updates with one another.

It was my mom’s turn. “What is new in your life, Penny?” they asked.

“Well, my son is doing an ippo (pronounced like ‘hippo’ without the H),” she proudly answered.

“What’s an ippo?” her elderly lady friend asked.

“I don’t know, but it sure sounds important,” was her answer. The church ladies nodded their approval.

This set the tone for the meeting and reflected our confidence that the Zayo IPO would be smooth sailing.

The IPO road show is an eleven-day process that starts on a Monday and culminates, if successful, with the IPO being finalized on Thursday evening of the following week. Before the road show is launched, a meeting occurs after the markets close on the preceding Friday to assess the conditions. Is investor interest high? Are the markets receptive to an IPO? Depending on the assessment, a go-no-go decision is made.

During our go-no-go call on Friday, October 3, 2014, our bankers shared concern. “Markets are showing signs of instability. Some pundits are fearful the IPO markets might be closing. Other IPOs are being delayed until the markets settle down.” Despite these warnings, their overall recommendation was “Demand for Zayo is strong. Though the choppy markets are concerning, our recommendation is to go.”

Zayo’s board agreed. We were a go. We flew to NYC over the weekend to launch the IPO road show on Monday.

Over the next seven days, we covered NYC twice, Boston, London, Chicago, and San Francisco. As I had my morning cappuccino in the city by the Bay, I was alerted that MoffettNathanson initiated coverage of Zayo. Its provocative headline was “Dark Fiber versus Towers: Batman versus Superman, or You’re No Jack Kennedy,” written by its talented young analyst, Nick Del Deo.

The business model of Towers—led by Crown Castle, American Tower, and SBA—was loved by investors for a good reason. Del Deo wrote, “Towers are almost universally viewed as the best business model in telecom, if not one of the greatest business models of all time.” The Tower model was a steady revenue growth, extraordinarily sticky customers, and strong cash flow. Crown Castle, American Tower, and SBA enjoyed valuations that were twenty-five times profitability, which was double the eight to twelve times typically ascribed to Bandwidth companies.

Was Dark Fiber similar in strength to Towers, like Batman to Superman? Or was the comparison unwarranted, as Sen. Lloyd Bentsen famously told Sen. Dan Quayle that he was no Jack Kennedy in the 1988 vice president debate?

Del Deo’s conclusion was “close but no cigar.” Dark fiber, in isolation, had the same attributes and was perhaps deserving of the Superman comparison. However, the business model of Dark Fiber at scale was never done. Zayo, though the closest to a Dark Fiber pure play, had significant other Bandwidth revenue streams. Bandwidth, in general, certainly was no Jack Kennedy.

In any case this was positive for our IPO. Even being close but no cigar to business models that traded at twenty-five times profitability was a strong endorsement. With newfound optimism, we completed the day in the Bay and headed to Los Angeles.

When we made the go-no-go decision, the S&P 500 index was nearly 2,000. Each day of the road show, the market environment was worsening. When we started our day in Los Angeles on October 15, one day before the IPO was to price, the S&P closed at 1,800, down 10 percent. The market was in no mood for an IPO.

Other IPOs were being pulled. The feedback our bankers received from Zayo presentations was positive, but investors were hesitant to commit to buying shares in the shaky market environment. The order book, which is the commitment from investors to buy shares offered in the IPO, was alarmingly low.

That evening, in Los Angeles, we began talking about the real possibility that we would need to pull our IPO. The bankers were noncommittal. The order book was weak, but verbal interest was encouraging. The general theme was, “Investors are focused on the losses in their current portfolios, not IPOs—but they like Zayo nonetheless.”

The plan for Thursday’s IPO pricing day was to drop down in Kansas City to visit American Century Investments and Waddell and Reed, and then continue to NYC. We’d arrive shortly after the markets would close and spend the next two hours with our bankers and board to execute, hopefully, the IPO.

I pushed back on the Kansas City stop. “Shouldn’t we head straight to NYC? We need to drum up interest in the IPO.”

The bankers explained, “That’s the job of the sales teams at Goldman, Morgan Stanley, and the rest of the syndicate. Your focus needs to be on Kansas City. Strong interest from one of the big Kansas City Funds could make the book.”

As we headed to the Los Angeles airport, we read the front page of USA Today: “Oil, Europe, Ebola Spook the Markets.” The flanking articles were “Signs of Trouble in Ukraine” and “Obama Seeks Fast Acting ‘Swat Team’ from CDC.”

Were we just going through the motions at this point? Was the IPO dead on arrival?

The bankers played the role of cheerleaders. “It’s premature to give up. Let’s nail it in Kansas City and hope the markets stabilize today.”

On the plane from Kansas City to New York, we crossed our fingers and knocked on wood, which seemed to work as the markets responded with a modest bounce back.

We arrived in NYC and beelined to Morgan Stanley’s headquarters. I insisted we relocate from the quiet private client floor to the trading floor. “If we have to pull this IPO, I at least want to be surrounded by high-energy traders.” We relocated. Much better.

At about 4:00 p.m., our bankers began giving us updates on the book. Orders were light, but interest remained. Investors were using the market softness to push back on price. The $21–$24 range we signaled during the road show was not going to happen. However, if we were willing to show flexibility on price, we had a chance.

“$20?” we asked. “Maybe” was the banker’s reply.

Every twenty minutes, they provided updates from the sales teams at each of the banks.

“Interest is sufficient at $15–$16 per share. We don’t yet have enough interest at prices above $16.”

Our board agreed with management. “$16 is too low. Tell your sales teams that the price needs to be $20, or we will pull the IPO.” If we pulled the IPO, that would be costly to the bankers. Whether we meant it, the threat motivated them.

Canceling the IPO would also be devastating to management. We would have to wait several months and then start the process all over again. Moreover, the markets would ask, “Did they pull it because investors didn’t like Zayo? Or was it really just the market environment?”

More than an hour passed. The book strengthened. “Good thing we didn’t listen to you,” one of the bankers joked with me. “We just got a big order from Kansas City at $20 per share.”

The bankers were now signaling we could get the IPO done but only if we accepted $19 per share. “There just isn’t enough demand at $20.”

In hindsight $19 versus $22–$25 wasn’t a big driver of value. We were selling about $600 million of stock, which would be about 10 percent of our total Market Value of about $6 billion. The primary value resided in the 90 percent we didn’t sell.

Nonetheless, the $19 felt like we were selling ourselves short. Emotions were high.

Some of our investors favored pulling the IPO. One selfishly told us, “We are not selling at that price. The rest of you can do what you want.” Their stubborn and self-centered position poked us in the eye. We pushed back, yet they wouldn’t budge.

At about 5:30 p.m., Zayo’s CFO, Ken desGarennes, had his best Zayo moment. His financial team was exhausted from the IPO preparation. The road show was grueling for the two of us. The entirety of Zayo had been working twelve hours a day since we founded the company seven years ago. He spoke candidly to the investors: “The board can pull the IPO if it wants. If you do, I hope you have better luck next time with your next CFO.”

Now that was laying down the gauntlet. I nodded to him in appreciation and motioned for the bankers to come into the room. “How much time do we have before we make the final decision?”

Surprisingly, the bankers from Morgan Stanley, Goldman, and Barclays weren’t sure. They huddled outside the door for a few minutes. They walked back in and pointed to the clock. “It’s 5:45. If you don’t pull it by 6:00 EST, you will be a public company on the NYSE whether you sell shares or not.”

We were all shocked. How could it be that we didn’t talk through this scenario in advance?

“What’s the minimum amount we can sell?” we asked. At a low price, we could mitigate dilution by reducing the number of shares. The trade-off is that Zayo needed enough shares in the public market, which is referred to as float, to allow sufficient liquidity for healthy trading activity.

“You can reduce the volume by about 20 percent. If you need to reduce it further, we would recommend you pull the IPO instead.”

“How’s the book looking?” we asked, knowing that updates were continuing to come in from the sales teams.

“We can get it done at $19 per share, especially if you reduce the shares by 20 percent.”

DesGarennes’s speech made us all realize that pulling the IPO because of $19 was an overreaction. We reduced the volume of shares being sold from the planned twenty-nine million to twenty-one. To accommodate investors who didn’t want to sell at the reduced price, we shifted to a majority of the shares being primary versus secondary.Primary are newly created shares that are sold by the company, where the company retains the cash. Secondary are shares sold by existing shareholders of the company, where the cash is to the benefit of the selling shareholder.

At 5:58 p.m., we gave the bankers the thumbs-up to fill the orders. We raised $400 million, with $100 million distributed to investors and $300 million staying with Zayo.

We rang the bell to open the NYSE the next morning. We watched as the first trade was made at just over $21 a share on the way to a closing price of $22. We met a much bigger team of Zayo colleagues, investors, and family that evening at Buddakan in NYC’s Meatpacking District. The backdrop of the markets in turmoil made Zayo’s IPO that much more special.

In the two years following the IPO, most of my original executive team moved on. They all made millions on their Zayo equity, and most were entering the primes of their careers. The team was understandably tired, as the first decade of Zayo was a work-around-the-clock experience. It didn’t help that most lived in Colorado, where cycling, hiking, and skiing were their alternatives to another grinding year at Zayo.

In the aftermath of the IPO, we continued the consolidation. We bought AT&T Canada, which had been rebranded as Allstream and provided us fiber assets that stretched from Vancouver through Calgary, Edmonton, Toronto, Quebec City, Montreal to Halifax.To learn more about Allstream, see appendix 3, “More Bandwidth Stories.” We acquired Spread Networks, made famous from Michael Lewis’s book Flash Boys: A Wall Street Revolt.To learn more about Spread Networks, see appendix 3, “More Bandwidth Stories.” We purchased Electric Lightwave (ELI) in the Pacific Northwest, which provided Zayo with ten thousand miles of fiber in thirty-five markets that both densified existing footprints and added several new markets.Electric Lightwave was the combination of multiple companies in the Pacific Northwest and the North: Integra Telecom founded by Dudley Slater, the original Electric Lightwave launched by John Warta, Minneapolis-based Eschelon, and opticAccess. After Slater’s thirteen-year reign ended abruptly in 2011, a revolving CEO door included Global Crossing’s Tom Casey, Level 3’s Kevin O’Hara, TelCove’s Robert “Bob” Guth, and tw telecom’s Marc Willency. Zayo paid $1.4 billion for Electric Lightwave. We even acquired a Vancouver Canada Dark Fiber provider named Optic Zoo.

The combination of 360networks, Allstream, and ELI—on top of the deep big city networks of AboveNet and Zayo’s other acquisitions—made Zayo the only legitimate nationwide rival to Level 3. However, as each year passed, execution of our plan became more difficult.

Zayo’s acquisition of AboveNet and subsequent IPO drew the attention of large institutional investors. They realized Zayo’s $1 billion of invested equity was now valued at over $6 billion. They wanted a bite of our Bandwidth pie.

“We are hunting for a fiber platform, similar to Zayo, that we can use to participate in the consolidation of the space” was the late-to-the-party banter of dozens of institutional investors. They locked arms with bankers, lenders, and consultants, convinced they could do what Zayo did, but far better. Acquisition multiples rose, while commercial deals became more contested.

I had opened Pandora’s box!

A subcategory of these growth investors was infrastructure funds, whose source of capital was sovereign wealth and pension funds. These infrastructure investors swarmed aggressively on the opportunity and viewed that their advantage was a low cost of capital, as the ridiculously low-interest environment of the 2010s suggested modest single-digit equity returns would be sufficient for their investors. This directly led to infrastructure funds being able to justify higher values for Bandwidth Infrastructure companies.

Over the next several years, a dozen growth equity and infrastructure funds acquired ownership stakes in fiber companies throughout the Americas, Europe, and Southeast Asia.In 2014 Ridgemont Equity Partners funded Cross River Fiber. In 2015 Antin Infrastructure Partners bought EuroFiber. In 2016 Partners Group acquired Axia NetMedia, which operated networks in Canada, Massachusetts, and France. In 2017 KKR bought Australian-based Vocus and bought 40 percent of Telefonica’s fiber spinout, Telxius. Tiger Infrastructure Partners funded Crosslake Fibre.

In 2018 TPG Capital acquired RCN cable and rebranded it as Astound. Antin purchased FirstLight from Oak Hill. Goldman Sachs’s West Street Infrastructure Partners partnered with Antin to take the UK’s CityFibre private. AMP Capital from Australia bought Everstream, a fiber operator in the Midwest. EQT funded a Europe rollup of IP-Only, GlobalConnect, and Broadnet. Antin bought Ufinet Spain. Infracapital purchased 50 percent of SSE Enterprise Telecoms in the UK.

In 2019 Macquarie Infrastructure Partners acquired Bluebird Network. EQT purchased inexio in Germany. Grain Management rolled up Hunter Communications, Ritter Communications, and Summit Broadband.

There were numerous transactions in 2020. Stonepeak also purchased Level 3’s South American business, branding it as Cirion. Brookfield Infrastructure prevailed in a bidding war with Macquarie to acquire Cincinnati Bell. Digital Colony acquired a majority stake in Beanfield. SDC Capital Partners acquired FatBeam. Swedish-based Polhem Infra purchased Telia Carrier. Profitability multiples ranged from the midteens to midtwenties.

Zayo’s IPO road show and the provocative “Superman versus Batman” analyst report drew the attention of the tower industry. If Dark Fiber had business model attributes akin to tower, perhaps the tower companies should enter the market. Pandora again!

Tower companies traded at twenty to thirty times Profitability and, given the strength of tower business models, received favorable terms on debt. Would these advantages result in tower companies being able and willing to pay a multiple of twenty times or more for fiber properties? If so, Zayo would be priced out of future acquisitions. The higher multiples also might lead to tower companies offering commercial terms that would be difficult for Zayo to match.

Tower companies were set up as real estate investment trusts (REIT), which provided them tax advantages over typical corporate structures. REITs are not subject to corporate income tax on the distributed earnings. If fiber and wireless infrastructure qualified as real estate under the REIT regulatory framework, tower companies could use REIT status to underscore their advantage over Zayo and other Bandwidth companies.

The tower industry in the United States is dominated by three companies: American Tower Corporation, Crown Castle, and SBA. Two of them—American Tower and SBA—decided to stick to their knitting. Why roll the dice on an unproven business model when your core business, to quote “Superman versus Batman,” is “the best business model in telecom, if not one of the greatest business models of all time”?

The third, Crown, reached the opposite conclusion. In 2014 Crown received a favorable private letter ruling from the IRS confirming that fiber networks would be permitted revenue in its REIT structure. Emboldened, Crown outlaid over $11 billion between 2014 and 2020 toward acquiring fiber companies, including several that I was targeting.The biggest company acquired by Crown Castle was Lightower, whose CEO was the very capable Rob Shanahan. See appendix 3, “More Bandwidth Stories,” to learn more about Lightower. Crown also acquired FPL Fibernet run by CEO Carmen Perez, as well as Dark Fiber provider Sunyses and Wilcon, a data center and fiber provider in Los Angeles. I tried multiple times to acquire each of these companies. They paid substantially more than what Zayo could rationalize.

In Zayo’s second-quarter 2015 earnings call, an analyst asked me, “With Crown Castle entering the game and Profitability multiples rising ever higher, has Zayo’s rollup finally run into a steep enough hill to slow it down?”

My rambling answer conveyed uncertainty.

It’s good to see . . . these [fiber] properties are worth a whole bunch of money.

We’re always asking ourselves where that next set of opportunities are, not looking backwards. . . . The one thing that won’t change is that we’re focused on an infrastructure strategy. Infrastructure is what we’re all about. Infrastructure is how we think about the world. We love investing in assets that have decades worth of life to them. That’s not going to change.

I expect us to continue to be acquisitive. That’s our nature, we’re good at it, and I think you’ll see us continue to be effective.

Was Crown’s rollup good or bad news for Zayo? Arguments could be made on both sides. Bad news was that Zayo would no longer be able to roll up fiber properties at attractive prices. Any fiber property that matched up well with Crown’s plan would be priced beyond Zayo’s reach.

The good news was that Crown consolidated many of Zayo’s pesky rivals and, better, was repurposing these companies to be primarily focused on mobile infrastructure. Crown would be increasingly disinterested and disadvantaged in the many other ways to leverage fiber. For example, financial services, healthcare, and tech firms would be reluctant to use a tower company for their mission-critical service. Verizon and AT&T would be reluctant customers, as Crown was now their Bandwidth competitor.

Most important, Crown was a tower company. Could they really effectively operate a Bandwidth Infrastructure business? Probably not was my assessment.

Crown’s fiber foray had one other implication: was Zayo severely undervalued? Crown was willing to spend $11 billion for a collection of assets that were 35 percent of what Zayo assembled. Does this mean Zayo was worth over $20 billion, instead of the $12 billion implied by our stock price? Maybe it was time to find out.

In 2008 I heeded Buffett’s advice by being “greedy when others [were] fearful.” In 2017, with the tables turned, I needed to comply with the other half of Buffett’s wisdom and “be fearful when others are greedy.”

Zayo’s window was closing. Our opportunity to generate outsize returns was shuttered by investors who were comfortable with mediocre returns.

In the mid-2010s, I met investor Marc C. Ganzi for the first time at a small investor conference hosted by a boutique investment bank at the Deer Valley Resort in Utah. When I introduced myself to him, he asked with a beaming smile, “You know what investors call me?” I shrugged. “They call me the Dan Caruso of Towers.” He paused, smirked, and then added, “And you are known as the Marc Ganzi of Fiber.”

One of my investors used a baseball reference when I told him of this conversation: “Yeah, except you started out in the grounds crew. Ganzi was born on third base.”

Ganzi is the grandson of Walter J. Ganzi Sr., an Italian immigrant who co-founded the Palm Restaurant Group. When Ganzi Sr. passed, his family had a public legal fight over ownership control of Palm. I suspect this took a toll on Ganzi.

Ganzi married Melissa Potamkin, the granddaughter of Victor Potamkin, who built a $1 billion-a-year automotive empire. In 2012 the Palm Beach Post dubbed them the “royal couple of polo” for their ownership of two separate polo teams, as well as Wellington’s Grand Champions Polo Club. They also own Aspen Valley Polo Club.

Ganzi’s father, Ted Ganzi, was a successful real estate developer, which influenced Ganzi down the real estate path. After receiving a business degree from Wharton, Ganzi bought a distressed real estate company, which led, eventually, to his focus on the real estate of towers.

Ganzi co-founded Global Tower Partners in 2003 and sold it for $4.8 billion to American Tower in 2013. The timing of the exit coincided with my Deer Valley encounter with Ganzi. Ganzi co-founded Digital Bridge Holdings, LLC (DigitalBridge) in 2013 to focus on the broader Communications Infrastructure sector, including Bandwidth Infrastructure. DigitalBridge merged into the public company Colony Capital in July 2019.When DigitalBridge merged into Colony Capital in 2019, the stock traded at $22 per share. After dipping below $10 in early 2023, it bounced to $12 a share in August 2024. Ganzi became the CEO of Colony Capital in 2020 when its founder, Thomas J. “Tom” Barrack, got into legal trouble.The billionaire Tom Barrack, an early and avid supporter of Donald Trump, was indicted in 2021 on nine charges stemming from his alleged lobbying for the United Arab Emirates as an unregistered foreign agent. In November 2022 he was found not guilty on all charges.

Returning to my budding relationship with Ganzi, he invited me to his home in Aspen, Colorado, in July 2018. We sat on his patio, which overlooked the Roaring Fork River, and shared a bottle of wine. Ganzi expressed interest in partnering with me to take Zayo private. As a CEO of a public company, I responded appropriately. Zayo would do what is best for its shareholders, and my involvement should not be viewed as a condition of a transaction.

I was open to a sale and would have considered staying on as CEO. However, I knew Ganzi and I were cut from the same control-freak cloth. At this point in our respective careers, we both needed to be the top dog. I couldn’t imagine a scenario where I’d work for him. And his personality was such that he would not be a hands-off owner who stayed in his investor lane, especially considering Zayo would be his biggest investment. He was Jerry Jones, not Robert Kraft, and I was Mike Ditka, not Dick Jauron.

The financial services firm Cowen and Company hosted an annual Communications Infrastructure Summit in Boulder.The Boulder gathering is now branded the TD Cowen Communications Infrastructure Summit. The combination of Zayo’s headquarters being Boulder and my brand as the industry’s outspoken leader was what led them to select Boulder in the mid-2000s. This conference remains a major tour stop for the players in our industry.

Ganzi continued his overture in a one-on-one discussion at my house during the 2018 Summit. Though no price was offered, he reiterated his desire to partner with me to take Zayo private. I assured him we would respond appropriately to any offer while again stressing the importance of my representing the interests of Zayo’s public shareholders, which wouldn’t be possible if I were to partner with him.

In October Ganzi called me again. He said he was working with other investors, and they were soon to make an offer.

Private Equity firm Stonepeak, with $50 billion to invest, also was showing interest.Stonepeak led an investment in euNetworks, backing euNetworks’s CEO and my former colleague, Brady Rafuse. Columbia Capital bought a controlling interest in euNetworks soon after we formed Zayo with a strategy that mimicked Zayo. I was an investor and assisted in bringing Rafuse on board as CEO. Under Rafuse’s leadership, the investment performed exceptionally well.

Stonepeak also partnered with Columbia Capital to fund Cologix, backing another Level 3 colleague of mine, Grant Van Rooyen. It, too, had a great outcome for investors. Brian McMullen, Stonepeak’s head of digital infrastructure, was the lead partner in its investment in a specialized fiber company.Stonepeak partnered with DigitalBridge to purchase Extenet Systems, a Chicago company focused on fiber infrastructure for wireless carriers. The original lead investor in Extenet was Columbia Capital. Ganzi was also an investor, with Ganzi and McMullen anchoring the board. The strained relationship between the two of them was said to be entertaining.

In October 2018 McMullen visited me in Boulder, which led to a meeting in NYC a week later. McMullen expressed interest in acquiring Zayo and hoped to have an offer submitted within two weeks.

Ganzi and McMullen weren’t the only ones interested in acquiring Zayo. EQT Partners, a Swedish-headquartered infrastructure investor with over $200 billion under management, was also salivating. The primary investors that backed EQT were European pension and sovereign wealth funds, which were at the time earning near-zero interest rate returns. Infrastructure was seen as moderate risk. Therefore, they surmised a mid-to-high, single-digit return would be a prudent risk-return trade-off. This cost-of-capital advantage led to purchasing assets at prices that were materially higher than the norm.

In the early 2010s, EQT named Jan Vesely to lead telecommunications infrastructure investments in the Americas. Vesely led EQT to substantially outbid others in acquiring two southeastern fiber providers for a combined $1.45 billion in early 2018.Lumos and Spirit were merged together and rebranded as Segra. Vesely, who was in his thirties, had a decade of post-business school experience that was entirely in investment banking. Despite having limited experience in operating businesses of scale, his approach as the investment owner was to be very hands on. If Ganzi was the Dallas Cowboys’ Jerry Jones, Vesely was the Las Vegas Raiders’ Al Davis. Later in 2018 Vesely turned his attention to Zayo.

With interest in Zayo heating up, I got prepared. The responsibility of a public company CEO is to maximize value for the shareholders. The CEO is personally liable for behaving in a manner consistent with this responsibility.Insurance can be used to mitigate the financial exposure. However, extreme situations could result in liability that is not covered by insurance. If fraud is involved, the CEO is criminally liable.

Every material public company acquisition was followed by ambulance-chasing attorneys organizing lawsuits aimed at the CEO and board. The lawyers will look for anything that can be spun to look suspicious and claim that the CEO behaved in a manner that did not maximize the outcome for the shareholders. An acquisition price for Zayo would be unusually large—the second-biggest LBO since the 2008 financial crisis. It would draw a lot of attention from unscrupulous lawyers who sought to profit from any transgression.A public company is required to file a “Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934,” also known as a Schedule 14A. In this proxy the details of all material events that led to the transaction are shared by the company with its shareholders. This Schedule 14A would be scrutinized by corporate litigation attorneys as they search for claims that the CEO screwed something up.

To protect from such claims, best practices are as follows. The CEO surrounds himself with extraordinary legal and professional advisors. Every step and communication are documented and shared with the attorneys. The CEO avoids conversations that do not include another representative of his company to ensure there is a witness to attest to what was discussed. Before taking any action, advice from lawyers and bankers is sought and documented. The board is genuinely engaged and formally directs each major decision.I am grateful for my capable Zayo deal teams, which included CFO Matt Steinfort, General Counsel Mike Mooney, Corporate Development Lead Rachel Stack, Investor Relations VP Brad Korch, Jason Rowe from Goldman Sachs, and the dynamic duo Marco Caggiano and Fred Turpin from JPMorgan. Zayo’s external attorney, Kenton King, partner at Skadden, Arps, Slate, Meagher & Flom LLP, represented us and was a godsend in keeping us focused and on a safe track. Zayo’s board, especially Don Gips, Linda Rottenberg, Scott Drake, and Yancey Spruill, was excellent throughout the process. For a deal doer like me, who thrives on acting autonomously and unpredictably during the negotiation dance, this required an adjustment.As I tell how the acquisition played out, I will exclude the specific involvement of the others on my team. This is not to diminish their important roles and contributions or overinflate mine. It’s only meant to improve the storytelling and firsthand authenticity of the events.

As is clear in the Schedule 14A, all my actions were the result of direction from Zayo’s board, and at least one member of my executive team joined me in each meeting and call. We abided by these best practices, and I was thankful we did. The transaction held up to scrutiny, and though a big class action lawsuit was filed as expected, all but one count was dropped at the onset. The single remaining count was trivial and led to a settlement that was immaterial for the new owners.

On November 6, 2018, Zayo had its quarterly board meeting. During the meeting, Ganzi called to tell me he was working on providing a written, fully financed proposal at a price between $41 and $42.50 per share, which I scribbled on the whiteboard while my directors watched. At the end of the board meeting, Phil Canfield, who led Zayo’s Series C round for GTCR, resigned as lead director.Don Gips replaced Phil Canfield as lead director, and Yancey Spruill was appointed to replace Canfield on the board. After his resignation was official and after he heard of Ganzi’s price range, Canfield pulled me aside to tell me he was considering participating in a potential acquisition of Zayo. That seemed unusual, but I told him I’d be supportive.

Michael Choe of Charlesbank, who led Zayo’s Series B round, called me later on November 7 with the message that he was hearing chatter in the markets about Zayo and assured me that he had a favorable view of the company. I don’t know if his message was a comforting reassurance as a friend or if he was fishing for a reaction.

Zayo announced its third-quarter financial results, which were slightly lower than expected. We also announced that we were evaluating a plan to spin Zayo into two companies—one focused on infrastructure and one focused on services. The pressure was getting to me, and my rushed announcement of a possible spin was clearly a mistake. The share price dropped from $30 to $23 on November 8. Not fun!

On Friday Stonepeak’s McMullen contacted me to reaffirm his firm’s interest in acquiring Zayo. During the following week, we learned Canfield and Choe were teaming with McMullen. On Friday, November 16, we received a written offer for $33 per share from a consortium consisting of heavyweights Blackstone, I Squared, Kohlberg Kravis Roberts (KKR), and Stonepeak partnered with Zayo’s biggest private investors, Charlesbank and GTCR, with the latter two partnered with Stonepeak as the consortium leaders.The lead for Blackstone was Greg Blank; Gautam Bhandari represented I Squared; and Brandon A. Freiman was on point for KKR.

On Sunday I communicated to McMullen that the offer was insufficient. The next day Bloomberg News published an article that Zayo was in play. Clearly, the consortium was leaking to the press to put pressure on us. This seemed cheesy.

On Tuesday they revised their offer to $34.50 per share. When McMullen asked for feedback a few days later, I told him this offer wasn’t meaningfully different from the prior offer and therefore still too low to engage. They went quiet for a week. I supposed they were going to see if anyone on our side would reach out to them. We didn’t.

In the first week of December, we heard from two activist stockholders. They encouraged us to consider selling Zayo in the low to mid-$30 range. The consortium’s pressure tactics now included leaking to the activist community, as was clear when the consortium timed its delivery of a revised $35 per share offer later that same week. Two days later I responded that although we would not sell Zayo at that price, we would support them in the due diligence process, including hosting them in Boulder.

On December 16 McMullen requested and was granted permission to include five former Zayo executives in the diligence process, including ex-CFO Ken desGarennes and my former co-COOs Chris Morley and Matt Erickson. Alongside Choe and Canfield, a majority of my most important Zayo partners were colluding to buy Zayo.

Zayo was likely the most lucrative investment ever made by Choe from Charlesbank and Canfield from GTCR. Both personally made millions of dollars from their involvement with Zayo. The ex-Zayo executives pocketed millions of dollars, in some cases in excess of ten million. Very few, if any, had net worths of more than a million before Zayo, and none of them had yet established themselves as industry executives. In no small part, they owed some credit for their success to me.

The consortium, as will become clear as I share the play-by-play, appeared to use hostile tactics to force us to sell Zayo to them at bait-and-switch prices. This put my former investors and executives, most of whom were close friends, in an adversarial position with me. Did my friends start out with the right intentions—to help me exit successfully from the public markets? Or was greed their motivation, seeing another potential run at wealth creation through Zayo, regardless of whether this would be abrasive to me? Indeed, as the transaction hostility intensified, it was unclear whether my former investors and executives were friends or foes.

I felt embarrassed. How would those around me—my board, Zayo employees, and the entire industry—view this? It certainly seemed to me an act of disloyalty. I took the situation personally. I was angry.

I also was disadvantaged, with the fight lining up to be a 10:1 battle in their favor. And they had the secret copy of my negotiating tricks playbook. Yet they underestimated me. I knew that Zayo was successful because of me, not despite me. Over my dead body were my former executives and investors going to force me to sell Zayo on the cheap. A 10:1 battle was, in this case, an even match up. As Michael Buffer bellows before a championship boxing match, “Let’s get ready to rumble!”

Aesop told us about the Sun and the Wind. One day the Sun and the Wind had an argument about who was stronger. To settle the dispute, they decided to have a contest to see who could make a passing traveler take off his coat.

The Wind went first, blowing with all its might to send strong gusts of cold air at the traveler. However, the harder the Wind blew, the tighter the traveler clutched his coat to his body. The Wind’s forceful efforts were in vain.

Next, it was the Sun’s turn, who smiled warmly and began to shine brightly. As the Sun’s rays gently touched the traveler, now feeling warm and comfortable, he willingly removed his coat and continued his journey.

The Stonepeak consortium played the role of the Wind, and I was the traveler. I needed to buy time and find an investor to be the Sun.

Wind requested to have its attorneys work with ours to work on the merger agreement. We denied this request, emphasizing the need to first reach agreement on price. By not working with them on the merger agreement, we would make it difficult for them to put legal and activist pressure on us to accept an offer that we viewed as too low. Without a negotiated merger agreement, Stonepeak consortium’s pressure tactics would be thwarted.

Wind requested permission to talk to sixty-three potential coinvestors. We denied this over-the-top request, knowing they would lock up each investor with standstill agreements to further reduce the likelihood of a competitive bid. Nasty.

On the same day, DigitalBridge contacted us that they were considering a joint bid with EQT at a price of $36 to $38 per share. Perhaps the two of them together would emerge as the Sun. Encouraged by the prospect of a bidding war, we hosted Sun in Boulder on December 20.

Wind must have caught wind that DigitalBridge and EQT were teaming up. On December 28, McMullen, Canfield, and Choe called me to again propose that the lawyers begin work on a merger agreement. I reiterated the need to first reach agreement on key terms, including price. They were frustrated.

Though I didn’t disclose it to Wind, I directed our attorneys to complete a markup of the merger agreement we received from Wind. If we agreed on price and other key terms, I wanted to make sure we were in a position to move quickly. I also sought to have an agreement ready for Sun to speed them up.

On January 9 we hosted Wind for an in-person diligence meeting in Boulder. I felt very awkward with my former colleagues peppering me with questions. The tables felt like they were turned on me. Undoubtedly, they had a large group of former Zayo employees on the other end of a conference bridge, repeating the same tactic that I used in the AboveNet transaction.

On January 12 McMullen requested permission to add DigitalBridge to Wind to ensure they had sufficient levels of funding. Luring DigitalBridge into the Wind consortium would cut me off at the knees. When McMullen told me that Blackstone already initiated a conversation with DigitalBridge, I cited this as a nondisclosure violation. We denied Wind’s request in hopes of preserving the competitive tension. However, damage was already done, as DigitalBridge was now doubting the pursuit of Zayo was worth its time.

I had a call the next day to deliver the no message to McMullen. I harped on their violation of the nondisclosure by reaching out to DigitalBridge without our permission. I relayed the message that we already provided Wind with sufficient access to our data. Now it was time for them to bring the dance to an end. We needed to see a firm offer. In anticipation of a bait and switch, I warned McMullen against coming back with a lower price offer.

Instead, Wind continued to pepper us with questions. I told McMullen that we would no longer respond to requests until the price was firmed up, noting that we were interpreting Wind’s messaging that they would be lowering their offer price. I expressed concern about leaks to the press, conversations with shareholder activists, and nondisclosure violations, which we interpreted as hostile tactics designed to pressure us to accept a lower price.

In the meantime we observed that Sun was not active in the data room. We terminated its access to the data room, which they seemed to not notice. Ganzi and Vesely appeared to have lost interest. We were cornered.

The South Beach Miami Metro Connect conference was the following week. Nearly all the players would be present. With all the press leaks and activist activity, all eyes would be on me. For the first time, I headed to Metro Connect not as the Roaring Bear but as the vulnerable prey.

I liked it better when I was the predator. So I decided to go hunting, specifically aimed at getting Ganzi and Vesely back into the bidding. I set up separate meetings with each of them in locations that would be highly visible to the curious onlookers.

On the first day of Metro Connect, I met with Vesely over lunch in the poolside venue. Nearly every table was occupied with telecom bankers, investors, and executives. Vesely noted that though he was very interested in acquiring Zayo, he was concerned that Wind had already convinced funding sources that the deal was locked up. He expressed that he did not want to waste EQT’s resources on diligence if there was no real prospect to complete a deal. In response, I emphasized we would open a window for them to get through diligence. “Submit a bona fide offer and we will grant you exclusivity to catch up,” I assured him.

Later that day I met with Ganzi in the courtyard that also was very visible to the early cocktail hour crowd. I emphasized the window of opportunity to submit a bid and complete diligence. Ganzi also expressed concern that funding sources were convinced that Wind had the transaction locked up. Ganzi also shared with me that Blackstone, citing his source as a former Zayo executive, told him that I would never agree to sell Zayo to him. Ganzi also shared that Blackstone told him that Wind would allow DigitalBridge to invest $1 billion if Wind was successful. This further violation of the NDA was a bribe to reward DigitalBridge to stay on the sidelines. Ganzi emphasized that he did not want to be used by me as a stalking horse.The expression “stalking horse” in this context means that a company gains negotiating leverage by enticing a secondary bidder to join the process, thereby prompting the primary bidder to strengthen its bid.

The next day I met with McMullen, at his request, in his private hotel suite. To my surprise, his bid partner, Gautam Bhandari from I Squared, was in his room. They orchestrated a clumsy good cop / bad cop routine, messaging that they were close to submitting a revised proposal but likely at a lower price.

The following day Zayo received a letter from an activist shareholder who encouraged us to accept an offer for an acquisition in the low to mid-$30s per share. A day later another activist sent a letter, encouraging us to accept an offer for $27 to $32 per share. Clearly, Wind was tipping off these activists to deliver body blows that would compel them to accept a reduced offer.

Two days later Wind played the anticipated card. They lowered their offer to $31.50 per share. Given the content and timing of the activist letters, we concluded that a Wind insider was violating the nondisclosure. We decided it was time for some head banging.

Through our bankers, we requested that all members of Wind, along with its legal and investment advisors, join a call to hear our feedback on its proposal. Wind must have been surprised when the only attendees representing Zayo were our legal and investment advisors. At our direction our attorney read a stern warning conveying that leaks to the press and to activist stockholders were unacceptable. Also, the revised offer price of $31.50 was insulting. Afterward, as we received reach outs from Wind’s leaders, we had a stress-relieving belly laugh at their “we would never do anything like that” denials.We don’t know for certain if any members (or, if so, which specific individuals) of the Wind consortium were leaking confidential information to the press or activist investors. We did know the leaks were harming Zayo and gave the warning in hopes of quieting the source.

The next night McMullen and Choe flew to Boulder for dinner with me. Their first message was that no one from their consortium leaked information or violated the confidentiality obligations. I conveyed my reaction with a smirk. Second, they informed me that one of their members dropped out of the consortium. They asked for but were denied permission to contact additional investors. I emphasized that Wind’s track record left us wary of its tactics and bellowed that they were not the only bidder.

In the meantime momentum was building with Sun. On February 12 Ganzi called me to report they were making substantial progress with EQT. Three days later we had a call with Vesely and Ganzi, during which they conveyed they would send an offer within a week.

A week later, on the same day, both Wind and Sun made their moves. Wind submitted a “best and final offer” with a purchase price of $32 per share, while Ganzi verbalized that Sun would be submitting a written offer at $35 per share. Whew. Ganzi and Vesely sent this message just in time.

We received Sun’s written offer four tension-filled days later. With the offer in hand, we delivered the message to McMullen, Canfield, and Choe that we would not transact for $32 per share. When McMullen asked me if I could provide feedback on the $32 per share, I had fun with my answer: “Our board took at face value your written statement that $32 was your best and final offer and, as such, did not provide any additional feedback.” I knew this would piss Wind off. The tables were turning.

On March 5, 2019, we entered a thirty-day exclusivity agreement with EQT and DigitalBridge, which would prohibit us from having any conversations with Wind. Sun would have time to catch up; Wind would be left stewing at being on the outside looking in.

A strategy in Texas Hold’em is to get the opponent to be potcommitted. During the early betting rounds, a player is prodded to push many chips into the pot, making it difficult to pull out even as the player begins to question the strength of his hand.

Wind already spent millions on consultants and lawyers. If they lost this deal, they would have to write it off as a loss. They were potcommitted.

Sun signaled that its diligence would be extensive, involving lots of consultants, accountants, and lawyers. The deeper they got into diligence, the more leverage we’d have. When Sun threw waves of MBAs, CPAs, and JDs at us, its chips accumulated in the middle of the betting pile. They quickly became potcommitted.

If we played our cards right, we could end up with two bidders, neither of which would want to go home empty handed. For the first time in a long time, I was happy.

We extended Sun’s exclusivity for two additional ten-day periods. This gave them time to lock up the $14.3 billion of equity and debt to fund the deal. It also provided the partners of Wind more time to seethe.

A couple of days into the exclusivity period, the activist shareholder, Starboard Value, released a public letter urging the company to sell but did not specify a price at which it would support a sale. We smiled, knowing that its informants were now at an information disadvantage.

A few days later, I received a call from Neil Hobbs, my close colleague from Level 3, who was an advisor to Stonepeak. Fishing for information, Hobbs asked, “Does it make sense for McMullen to continue working on the deal?” I stuck to our public disclosures, which was a clear hint that we were under an exclusivity with another party but still considering options. I did not comment when Hobbs asked if there was any concrete feedback concerning steps that McMullen could take. I imagined Hobbs reported back in his infamous colorful tongue, “I told you dumb fucks that you want Caruso on your side of the table, not lined up against you.”

In parallel, more as a ruse than a contingency plan, we launched a process to sell our data center business. This noise would keep both Wind and Sun on their toes. Two weeks into the exclusivity period, McMullen emailed me, asking for a call. When I told him I could only speak to him if the topic was the sale of our data center business, he confirmed data centers was the topic of the call. During the call, as expected, McMullen focused on his bid for Zayo: “Once the exclusivity period ends, Stonepeak would like to reengage, suggesting he would advocate for Wind to increase its offer to $35 per share.” He blamed others in his consortium for the bait and switch. My response was simply that this is not a topic that I was permitted to discuss. I wish Zoom was the norm back then so McMullen could see my childish grin.

The McMullen reach out was also an assist with Sun, as the NDA obligated us to disclose the McMullen reach out, prodding Ganzi and Vesely to avoid a bidding war by getting to the finish line quickly and with no retrades.

At Ganzi and Vesely’s invitation, we scheduled a dinner. I picked Corrida, a Spanish Steakhouse that overlooks the flatirons of Boulder. I wanted the atmosphere to convey partnership, which made Corrida a natural choice. Their goal was to begin discussions around my commitment to remain as CEO. My message was that if Sun was successful in its bid, they could count on my support in any way they needed—whether or not they wanted me to remain as CEO. I was not looking for any commitment in exchange. I was open to rolling over a portion of my equity, which gave them the assurance that I’d have skin in the outcome.

As we transitioned to mid-April, I received almost daily reach outs from McMullen. “Are you in a position to discuss our bid?” he’d ask. I answered him by ignoring the emails.

Finally, on April 24 the exclusivity period expired. I spent the prior two days with Ganzi and Vesely hammering out the remaining terms of the merger agreement. We were close to done but not quite there. Ganzi and Vesely pleaded for another extension. My message was clear: “I’m getting daily emails from the other suitors. You need to get the deal done or risk losing it.”

Like clockwork, McMullen reached out the next morning. He was clever in his search for a scoop. “We would be willing to join another consortium at $35 per share to fill an equity gap,” he stated. My reaction, he hoped, would reveal that the DigitalBridge and EQT team were stuck. Instead, I had fun by playing dumb. “I’m not aware of another consortium with an equity gap” was my retort. “Are you?”

McMullen noted that he would follow up further with the other members of Wind and get back to us. Two days later Wind submitted an offer, which did not specify a purchase price. Were they still fishing? Or was there friction within Wind on what to bid?

We declined to engage, letting them know we were mindful of our prior experiences with them. Our message was clear: if we give you another shot at this, stop jerking us around.

Later that day I received a call from Canfield. “We shouldn’t have sent you an offer without a price. We remain interested and will come back with a price.” Six days later they came back with $33.50 and also noted Blackstone dropped out of the Wind consortium.

Believing we were days away from signing with Sun, we had our bankers pepper Wind’s investors one last time: “Why do you remain below the $35 price?” Their response was that $33.50 was the highest consensus they could get to with their current group. To stall for time, we provided them a draft merger agreement but without a reaction to the $33.50 price.

In parallel, I focused on the final issues in the Sun agreement. With all substantive matters behind us, our board authorized me to have discussions with Ganzi and Vesely about my commitment post the acquisition. In a video call on May 6, they expressed their interest in having me continue as CEO. I emphasized that I didn’t want to delay the transaction by negotiating the details of an employment agreement. With Wind in the backdrop, Ganzi and Vesely were also wanting to avoid a delay. To get them comfortable that I’d be aligned with them, I agreed to roll over $105 million of ownership.

With this behind us, we were ready to get to the finish line. I had my team come to my house in Boulder, as I wanted us to be together when we signed the agreement. At 2:00 a.m. on May 8, we exchanged signatures.

The fight was over. Sun, whom I wanted to win, prevailed. My clean exit was near.

The saga was not quite over. Telecommunications transactions require an extensive closing process. Approvals are required from each country, state, and city. The process often takes a year or more.

My responsibility as a public company CEO was to ensure Zayo got to closing as promptly as possible while avoiding any risks that the transaction would be derailed. DigitalBridge and EQT were responsible for raising the capital to close the transaction, which included nearly $8 billion in debt. Other than ensuring Sun had the support they needed, I didn’t pay much attention.

In February the debt raise took a twist. My CFO stopped by my office. “Vesely asked if you are joining the road show next week.” A road show, similar to the IPO shindig, was required to sell the debt offering to investors.

I was confused. “I wasn’t planning on it.” I wasn’t asked for my opinion on the financial plan. Given the behavior during the first six months of the closing process, I assumed they’d be bringing in a new CEO. I had no reason to think they wanted me to be part of the debt raise.

“I think Vesely is going to call you and encourage you to join them.” When Vesely called, he told me it is typical that the CEO participated in the debt raise. I agreed to join the road show.

I was ten minutes late to the New York City kickoff of the debt raise. The room was packed with fifty professionals from DigitalBridge, EQT, their bankers, and their law firms. Most were sitting around a huge table, and all eyes were on me. I looked for a seat against the wall, thinking I was an observer who might answer a few contextual questions. Instead, I was directed to the center of the table.

Vesely said, “Dan, the team would like you to walk them through the presentation you will use on the road show.”

Huh? I am the one raising the debt? When was this decided and by whom? And why didn’t anyone give me a heads-up?

Whatever. I did as I was asked and took the deck, which I was seeing for the first time, and danced through my pitch. Most of the material was from my Zayo story decks, so it wasn’t hard. I turned it over to Vesely and my CFO to explain its financial plan.

We used Ganzi’s jet to bounce between New York, London, Boston, and San Francisco. As expected, the international representation in the meetings was extensive, as the story had appeal to Asian and Middle Eastern investors. In each meeting I did 75 percent of the talking.

The road show was fun. I enjoyed the time with Ganzi and Vesely. Investors liked the Zayo take-private story. Debt markets were frothy. Not only did we generate more than enough demand, but DigitalBridge and EQT were also successful in negotiating fantastically favorable terms.

Something else was in the air in February 2020—COVID-19. I spent the second half of February in bed begging my wife not to ship me to the hospital, as I feared what they did to people with this mysterious disease. I had visions of a young John Travolta as Bubble Boy. After a week of lying in bed shivering with a fever and sucking oxygen from a tank, I got better.

With the debt raise done and all regulatory approvals in hand, we were ready to close the transaction. On March 9, 2020, the sale to DigitalBridge and EQT was official.

In the press release, I said, “We are excited to launch this new chapter of Zayo as a private company under the ownership of a consortium led by two highly experienced infrastructure investors who have a deep understanding of our business and bring significant value to Zayo. . . . As a private company, we will have greater flexibility to pursue our long-term strategy and leverage our fiber to fuel global innovation for our customers.” These were more than just the right words. It conveyed what I believed to be true. I still do.

I had minimal discussions with Ganzi and Vesely as we approached closing. When my executive team asked me if there would be changes post close, “I have no idea” was my answer. If I were being forthright, I would have told them, of course, changes were soon to come.

Soon after closing, Ganzi and Vesely informed me they were bringing on a new chairman, Verizon’s former COO, John Stratton. As mentioned in the previous chapter, my last encounter with Stratton was a few years prior, when he threw cold water on the discussions I was having with his boss, Verizon’s CEO Lowell McAdam. After McAdam left Verizon, Stratton was passed over for an outsider CEO. Overall, Stratton was a likeable guy. However, the thought of Zayo (and me!) being guided by a career Verizon executive was amusing.

Stratton told me that if I played my cards right, I could continue as CEO. “Geez, thanks,” I sarcastically thought. I was perplexed why he thought I’d be interested in continuing as CEO in this environment. I was way past the point in my journey where I’d work for a chairman picked by owners without my involvement. I had one year to wait before I was fully vested, so I played along.

The board was staffed with nine people, and no spot was left available for me. “Eleven more months until vesting,” I thought.

Consultants of all types arrived. The cost consultants declared Zayo was inefficient. The customer experts advised our customer focus was too narrow. The service experts cited concerns about the health of the network and the quality of customer service. The system experts declared our systems and data needed an overhaul. The talent consultant concluded the leadership team needs to be up-leveled.

The consultants applied the consulting playbook. Their phase one findings led to an expensive phase two engagement. When phase two didn’t show the results, the consultants teed up an even more expensive phase three.

DigitalBridge and EQT purchased Zayo. It was their company now. They bought the right to do whatever they thought best for the company. My job was to get out of their way and wish them the best.

Six months after we closed the transaction, I left Zayo. Steve Smith, the long-tenured CEO of Equinix and a friend of mine, took over the reins of CEO.

Zayo’s sale to DigitalBridge and EQT became the second-largest LBO since the 2008 financial crisis. My thirty-five-year journey as the Bear of Bandwidth had an appropriate and positive ending. For those of you keeping score, $1.1 billion was invested into Zayo’s equity. The value of this investment grew to $8.5 billion. The MOIC of eight times and the IRR of 35 percent were extraordinary for an investment of this magnitude.

Zayo was, and still is, the only national pure-play provider of Bandwidth Infrastructure.

More than a dozen members of Zayo’s management team became C-level leaders at other Bandwidth companies and many were backed by Zayo investors. Most of them assembled teams that were anchored with Zayo veterans. I am most proud of this portion of my legacy.

I proved to myself, and less importantly to anyone else who cared, that a Bandwidth Infrastructure business could be run in a way that produced a fantastic long-term outcome for its stakeholders. Warren Buffett, I think, would be impressed. Jim Crowe, for certain, would be proud.