Security Staff Acquisition & Development, Mergers and Acquisitions, Mergers and Acquisitions, Content

AppRiver Founders Exit Zix; MSP Partner Commitment Intact

AppRiver CEO Michael Murdoch

AppRiver founders Mike Murdoch and Joel Smith along with COO Scott Cutler will exit the business over the next 30 days, now that Zix owns the MSP-centric software and cloud security company.

AppRiver Co-Founder Scott Cutler
Former AppRiver COO Scott Cutler
AppRiver Co-Founder Joel Smith
AppRiver Co-founder Michael Murdoch

Murdoch, Smith and Cutler were quiet pioneers in the MSP software industry. Admittedly, executives from ConnectWise, Contiuum, Datto, Kaseya and SolarWinds MSP often dominated the market spotlight. But AppRiver's team quietly embraced MSPs and grew the business organically before lining up private equity, making acquisitions, and ultimately selling the business for $275 million to Zix.

"I would like to thank them for what they have built over the past 18 years," Zix CEO David Wagner said during the company's quarterly earnings call on  Thursday. "They began with a cloud-based email security product and a deep commitment" to  partners such as MSPs.

AppRiver's History and Zix Next Moves

Zix CEO David Wagner

The AppRiver business over the past decade evolved to include hosted Exchange to which AppRiver has a 100% attach rate for advanced email security, Wagner noted. And more recently, AppRiver developed a large Office 365 practice as one of the first two-tier distributors and now the second largest provider of Microsoft Modern Workplace Solutions, he added.

Amid the M&A deal, Zix has implemented roughly $8 million in cost reductions. The savings, according to Wagner, include approximately:

  • $2 million per year of executive compensation and expenses;
  • $2 million of third-party cost synergies redundant expenses like PR firms, advertising firms, legal fees and accounting; and
  • $4 million of headcount reductions as a result of approximately 40 employee job cuts that were balanced across Zix and AppRiver.

Looking ahead, Zix will now focus on these four core business priorities for 2019, Wagner said.

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.