The merger between Zoom Video Communications (NASDAQ:ZM) and Five9 (NASDAQ:FIVN) was recently called off, but Zoom has been clear in signaling its intent on growing its services for its largest business customers. contributors Jason Hall and Nicholas Rossolillo discuss a couple of alternative acquisition options to Five9 in this Motley Fool Live segment from "The Five" recorded on Oct. 1.

Jason Hall: Guys, let's talk Zoom, Zoom, Five9. I guess the marriage is off. It's been officially announced now. I guess the word was at Five9's, I guess they have enough shareholders that were like, "We're not going to approve this," and it fell apart. Of course, both companies share prices went up today. Guys, here's the question. What should Zoom do next? Nick, do you have some ideas here?

Nicholas Rossolillo: I'm also really glad we're talking about this today, because yesterday, I think this news might have broke when I was talking with Brian and Toby about it. I was clueless, some stuff I shouldn't have.

Hall: I was just going to say, "What did you say?" Were you looking positively about this is a good outcome.

Rossolillo: I think I was talking about that, and someone had asked, "What should I buy, Zoom or Five9?" It's possible that they were asking because they knew it followed through and that's exactly Five9 shareholders after Zoom stock fell again, they were like, "No, thanks. We don't want Zoom stock." So the deal got scrapped.

Hall: This is an all stock deal too.

Rossolillo: All stock deal. The companies were really tying their fates together. Five9 shareholders, they were basically holding out whether or not they wanted to become Zoom shareholders. The deal wasn't good enough anymore for enough of them.

As far as what they should do next, Five9 is an interesting company. They are in this Cloud-based contact center space. I think that's why Zoom has very clearly indicated they're headed with the Zoom phone that we talked about in the past. You don't think it gets enough PR, with what's going on there. Clearly, they're after the telecom industry. They want a cut of that massive one and a half trillion dollar a year spending, that happens with telecoms. There's other contact center businesses out there they could go after. Some of them are not too far off of where Five9 is.

Two competitors, RingCentral (NYSE:RNG), ticker is RNG. 8x8 (NYSE:EGHT), EGHT, you may see they went with Five9, which is right in the middle, as far as market cap goes currently. But RingCentral, 21 billion market cap, Eight by Eight 2.7 billion market cap. Significantly smaller. But I think what's interesting about these companies is the growth profile. Five9, I think it's interesting that Zoom had chosen Five9 mainly because of the free cash flow metric. It's profitable, it's growing as fast as the other companies. Not as big as Five9 [bigger than] 8x8 but it's profitable, which definitely fits with Zoom's capital structure. They're also very profitable software firm. But I don't think it will be too far off if they ultimately decided, hey, maybe one of these other two peers in this Cloud-based communication space, contact center space, I don't think it would too absurd for Zoom to say, "Hey, let's go after RingCentral or 8x8."

Hall: I think you bring up something really key here. If this specific bucket is something that Zoom is looking to fill, is looking to build part of an integrated business, looking within the same group of enterprises is the key. It will be interesting to see if they can find another potential partner there.

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