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ConnectWise Acquired: Sale Creates Over 70 Millionaires

Thoma Bravo's buyout of ConnectWise, disclosed today, has a life-changing twist for hundreds of employees and families that have ties to the Tampa, Florida-based IT management software provider.

Indeed, more than 70 ConnectWise employees and alumni will become millionaires from the deal, according to Arnie Bellini, co-founder and former CEO. Overall, hundreds of ConnectWise employees will receive a combined $270 million from the deal, Bellini told ChannelE2E in an interview about the deal. Although proud of that figure, Bellini also tempered his comments -- revealing that today's announcement also includes about 110 staff cuts as the company seeks to rebalance its talent pool, and pursues hires for about 70 different positions in growth areas. (See more details in this interview with Bellini and new CEO Jason Magee.)

ConnectWise has been privately held, self funded and debt free since its founding nearly 40 years ago. The company quietly began issuing stock to employees more than two decades ago.

  • The goal: Align employee performance and compensation with the company's performance.
  • The challenge: There was no way for employees to unlock the value of those shares until ConnectWise executed an IPO, company sale or some other type of financial event.

Major Inflection Point

Who deserves credit for the equity plan? The short answer is Arnie's wife, Lauren Bellini. "The story starts somewhere between 1996 and 2000 or so," Arnie Bellini tells ChannelE2E. "I was working really hard. I was banging my head against the wall. I felt like I was working harder than my employees. That's when my wife gave me some advice. She told me to make the employees owners in the business. So, we did exactly that."

Arnie and Lauren Bellini

The equity plan's value grew as ConnectWise grew. Fast forward roughly 20 years to Thoma Bravo acquiring ConnectWise. "It's a high-tech success story because of our colleagues here at ConnectWise, and because of our partners," Bellini says. "Who won? The simple answer is everyone won. Our colleagues -- our employees and alumni -- will redeem over $270 million in stock. More than 70 millionaires are being created. We are changing the lives for hundreds of ConnectWise families because we so broadly distributed equity in the business."

"Again, who won?" Bellini continues. "Our colleagues won. And we all won. We never had to raise money or go into debt while we were building the business. Why didn't we need to raise money or go into debt? Because of our colleagues, our team, and their hard efforts. It's that simple. If you're not greedy and you believe in the team, everyone can win."

Rare Formula for Broad Employee Success

In today's Uber-driven technology world -- where hundreds of money-losing upstarts align with venture capitalists to fuel massive growth ahead of profits -- ConnectWise's journey is extremely rare.

Consider the ConnectWise variables:

  • A broad employee equity plan;
  • privately held status;
  • no venture funding;
  • no debt;
  • consistent 20-percent annual revenue growth;
  • profits that grow even faster; and
  • a sale to a private equity firm.

Within the tech industry, many employees often discover that their equity in a privately held business is worthless amid a company sale or change of ownership. The reason? Certain executives often are preferred shareholders, while rank-and-file employees often own lower-class shares. Depending on an M&A deal's structure, the lower-class shares could be deemed worthless. That painful scenario has unfolded multiple times in the MSP software market in recent years.

ConnectWise is the rare exception to that rule.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.