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ConnectWise CEO Jason Magee, Founder Arnie Bellini: The Interview

The rumors reached ChannelE2E about a month ago: Thoma Bravo was set to acquire ConnectWise  — a landmark deal involving one of the world’s most successful private equity firms and the partner-obsessed MSP software provider.

ConnectWise Co-Founder & Former CEO Arnie Bellini

ConnectWise CEO Jason Magee

We hinted to readers on February 4 that the deal was coming. ChannelE2E’s quest to confirm the story with ConnectWise leadership led us directly to the company’s Tampa, Florida, headquarters on Wednesday, February 20. New CEO Jason Magee and Co-Founder Arnie Bellini granted us an interview that day —  confirming the deal as part of a news embargo that lifts Monday, February 25.

ChannelE2E’s one-hour interview with Magee and Bellini, held February 20 in Bellini’s office, is paraphrased below. We’ve added links throughout to help readers understand the context of various comments and perspectives. We’ve organized the interview into the following sections:

  1. The journey to the deal
  2. The CEO succession process
  3. ConnectWise Partner Strategy, Headcount and Staffing Levels
  4. ConnectWise Employees and Company Equity
  5. Additional Mergers and Acquisitions?
  6. The Bottom Line: What CEO Jason Magee wants partners and employees to know

1. ConnectWise CEO Jason Magee & Founder Arnie Bellini: The Interview

ChannelE2E: What was the journey to this deal? When did you begin preparing for a potential financial event?

Bellini: In many ways it dates back to 2013. I was training to swim the English Channel. We were committed to aligning the company around a master brand — ConnectWise. We were preparing for our next chapter. We looked at a potential IPO. We worked with JP Morgan and Goldman Sachs. We spent $9 million and two years really evaluating that path, but we determined that wasn’t the best route for our partners and colleagues. We also evaluated making no changes to our ownership structure. And we met and interviewed eight private equity firms. We literally interviewed them to find a great fit.

If we were going to take the private equity path, the investor had to be a fit with our  mission, our vision, our culture and our commitment to IT Nation — our partners. We asked ourselves: Who aligns with all that? Who will let us move forward and invest in the whole business — the entirety of our business — including our partner focus? Who will invest in the next chapter with purpose and vision, and with the same care and attention and love for our partners? The answer was Thoma Bravo.

In terms of taking this five year journey, it’s the most difficult thing I’ve ever had to do. It was more difficult than swimming the English Channel. It had to be right. We had to mature the products, the management, the marketing — everything. And we built a board of directors to ensure external influence. To ensure the proper guidance and governance. We did all that.

ChannelE2E: Did you run the sale process as an auction?

Bellini: We did not run an auction. An auction is about finding the highest bidder. We wanted the best fit. We found that in Thoma Bravo. We interviewed potential buyers and we found the right buyer. And we selected that buyer.

ChannelE2E: Did you consider selling the business to a strategic buyer — such as a Cisco Systems or Tech Data? [Note to readers: ConnectWise and Cisco partner closely. Also, ConnectWise and Tech Data are neighbors in Tampa, and they have SMB distribution synergies.]

Bellini: Yes. That was part of the journey. We spoke to multiple strategics, including Cisco. But we determined that Thoma Bravo gave us the opportunity to accelerate everything for our partners.


2. ConnectWise Names Jason Magee CEO: The Process

ChannelE2E: Arnie, what was the process for identifying and selecting ConnectWise’s next CEO?

Bellini: There were three internal candidates. They’ve known about the CEO transition for the past year. And they each pursued the position. It wasn’t about competing with each other to get the job. It was about working with each of them to prepare them for new responsibilities. They took high impact leadership classes. They each had curriculum for their specific journey. Jason won the position. He was the obvious choice, given his deep knowledge of the MSP and VAR space. He was a VAR. He is from our space. He’s cut from the cloth of our partners.

ChannelE2E: Arnie, how did you know now was the right time to for you to step down as CEO?

Bellini: I think the true mark of success is when you can leave no wake or ripple in the pond when you transition the leadership. We’ve built a management team that will take the company forward. I’m happy to say I’ve worked myself out of a job. It’s the right time for this move.

ChannelE2E: Jason, when did you realize that you wanted to pursue the CEO position?

Magee: It wasn’t something that I necessarily set out to do when I arrived here eight years ago. For me, it’s been more about taking on new challenges and succeeding in each step of the journey. I’m driven by new challenges. I’m a 24×7 worker. With each new role, I took on new challenges and new responsibilities. I went to Arnie about a year ago and said I’m ready for more. After I became executive VP and COO, I told him I was ready for the president position. Like I said, one step at a time. First president. And now CEO.

ChannelE2E: Jason, can we expect any changes on the executive team or do you have the right leaders in the right seats?

Magee: Our current management team is intact. We’ve got the right leaders in place. That’s the beautiful thing of about the private equity firm we’re going with — Thoma Bravo. They are aligned with our management.

ChannelE2E: Arnie, how involved in ConnectWise will you be going forward?

Bellini: I will be as involved as much as the company needs or wants me. Jason can tap me for anything, any time. And I still have a large equity stake in the company going forward company.


3. ConnectWise: M&A Announcement, Partner Strategy, Headcount, Staffing Levels

ChannelE2E: Jason, when you announce the acquisition to employees and partners, what will you say? What’s your core message?

Magee: I want to get everyone focused on the go-forward. I want to make sure our partners and colleagues understand our five-year plan and our 2019 strategy. This is not the ending. It’s the start of the next chapter. I’m not Arnie. But we share similar thoughts. I just work through those thoughts a little more methodically. It’s like understanding the difference between Captain Kirk and Captain Picard. Arnie is more like Kirk. I’m more like Picard.

ChannelE2E: Jason’s been running day-to-day here at ConnectWise for quite some time. Has he also driven the recent M&A deals?

Bellini: Jason did the ScreenConnect deal. He oversaw the HTG Peer Group and Sienna Group acquisitions. He managed the Perch Security investment.

(Note: Magee humbly nodded in agreement, confirming his role without any chest pumping.)

ChannelE2E: How many employees does ConnectWise have these days?

Magee: About 1,050.

Bellini: But we want to be proactive and transparent, and make sure there’s no misinformation in the market. We will be realigning the teams for our five-year strategic plan and 2019 strategy. We’ll be eliminating 110 positions and adding 70 new positions. We want to assure everyone that we’ll go the extra mile to help those who are affected. For those affected, they’ll keep their stock. We’ll put in money, time and effort to help those affected with job matches. We’ve hired consultants to assist with resume building, career pursuits and more. And we’ll offer great severance. We want to go the extra mile to make sure everyone who is affected gets jobs quickly.

ChannelE2e: ConnectWise started as an IT support business for the Tampa area. What becomes of that IT support business?

Bellini: It’s already a separate company — it’s not part of the Thoma Bravo deal. We just have to rename it [the Tampa-focused IT support business].


4. ConnectWise Employees and Company Equity

ChannelE2E: Arnie, several years ago you told me that many ConnectWise employees are shareholders in the business. When and why did you begin extending stock to employees — and will those employees benefit from the company sale?

Bellini: The story starts somewhere between 1996 and 2000 or so. 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 [Lauren Bellini] gave me an important piece of advice. She told me to make the employees owners in the business. So, we did exactly that.

Now fast forward to Thoma Bravo acquiring ConnectWise. It’s a high-tech success story because of our colleagues here at ConnectWise, and because of our partners. 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? Our colleagues 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 and their hard efforts. It’s that simple. If you’re not greedy and you believe in the team, everyone can win.


5. ConnectWise: Additional Mergers, Acquisitions?

ChannelE2E: Jason, will ConnectWise roll up with another Thoma Bravo company — say Continuum, SolarWinds MSP or Barracuda?

Magee: ConnectWise will remain ConnectWise. We are not rolling into another Thoma Bravo portfolio company.

Kaseya CEO Fred Voccola

Continuum CEO Michael George

ChannelE2E: Arnie, about three weeks ago there were rumors that Thoma Bravo would merge ConnectWise and Continuum, and Continuum CEO Michael George would lead the combined companies. Was there any truth to that rumor — is such a move or anything like it coming?

Bellini: No, there’s no truth to that rumor. Michael is a great guy. Perhaps the rumor started because Michael has been to our headquarters over the past year. When we announced that IT Nation would be open to all vendors, Michael to his credit was the first CEO to get on an airplane and meet with us face to face. It just so happens that his company, Continuum, is a Thoma Bravo company.

But like Jason said, ConnectWise will stay ConnectWise. We have no immediate merger plans with any other company. We still need to execute on our recent acquisitions and investments. We need a bit of a breather from more acquisitions.

ChannelE2E: There also were rumors that Kaseya’s parent, Insight Venture Partners, wanted to acquired ConnectWise and merge it with Kaseya. Did you consider such a move?

Bellini: Never. The cultures would have clashed.


6. ConnectWise Acquired: The Bottom Line

ChannelE2E: What’s the message to your partners — right here, right now, and from this day forward?

Magee: The message is that our passion for partners continues. It’s part of our five-year plan. It’s one of the reasons that Thoma Bravo wanted to acquire us. They like our unique partner focus. They like our commitment to everything as a service. And they like our commitment to IT Nation.

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