N-able Owner SolarWinds Mulling Company Sale
SolarWinds is talking with several private equity firms about potentially selling itself, according to Reuters:
“[SolarWinds], which has a market capitalization of close to $3.5 billion, is working with an investment bank, the sources said this week. They said the talks might not progress and that the company might decide not to sell itself. Investment bank JPMorgan Chase & Co is working with SolarWinds as it explores a possible sale, two of the sources added.”
In response to the report, SolarWinds confirmed that it’s mulling a potential company sale, according to StreetInsider. The SolarWinds statement said:
“SolarWinds (NYSE: SWI) today announced that the Company’s board of directors, in response to an unsolicited expression of interest from a third party, has commenced a review of its strategic alternatives. This review may result in the Company’s continuing to pursue value-enhancing initiatives as a standalone company or a possible sale or other form of business combination. The Board of Directors has retained J.P. Morgan as its financial advisor and DLA Piper LLP (US) as its legal advisor in connection with the review.”
The SolarWinds statement said there’s no guarantee that a transaction (i.e., company sale) will occur.
SolarWinds In Transition
Generally speaking, SolarWinds has performed well in recent years — acquiring N-able in 2013 and several other tools for IT automation. In fact, I think the SolarWinds N-able combination is a great model for how Barracuda should manage the recent Intronis purchase.
For its second quarter results released in July, SolarWinds said revenue was $119.1 million, up 17 percent vs. the second quarter last year. In a prepared statement at the time, CEO Kevin Thompson pointed to strength in the company’s MSP and cloud businesses.
“During the second quarter of 2015 several areas of our business performed well including our MSP and Cloud businesses, license sales in our US Federal and Asia-Pacific businesses, our installed base teams’ sales efforts and our customer retention rates,” Thompson said.
Still, SolarWinds has been stung from time to time by aggressive investors who want even faster growth. The Q2 SolarWinds results fell short of WallStreet’s expectations, which triggered a stock sell-off at the time.
SolarWinds, N-able and Rivals
SolarWinds’ easy-to-try software has been a hit with corporate IT managers. In recent months, SolarWinds has injected PSA and ticket management functionality into N-able’s platform — essentially preparing to compete more aggressively against Autotask and ConnectWise.
Meanwhile, the MSP software market as a whole is in transition. Companies like Autotask, Continuum Managed Services, LogicNow and Kaseya are privately held and have third-party investors or private equity ownership. That means those companies will eventually IPO or pursue an M&A exit — a journey that will likely require several more years for each company, I suspect.
Moreover, ConnectWise has remained in growth mode and is preparing deeper integrations at the IT Nation conference in November. As I recently stated, the race is on to build a truly end-to-end MSP management platform.
Wildcards to Watch
If SolarWinds gets acquired, MSPs should closely watch the status of N-able General Manager JP Jauvin and Senior VP of Sales Mike Cullen. That duo, along with several other key N-able leaders, remained focused on the MSP base even when SolarWinds was busy buying N-able.
Translation: There’s plenty of M&A experience and success within the N-able halls. But I’ll be curious to see if the N-able team wants to work for another round of owners if SolarWinds gets acquired.
Lots of ifs. We’re watching for potential updates.