ConnectWise on the Sales Block?

Citing unnamed sources, CRN is reporting that ConnectWise is on the sales block with a likely sale to another private equity firm. ChannelE2E has heard similar whispers.

ConnectWise's potential sale is not a big surprise to anyone who has followed the company for a long time. ConnectWise was acquired by private equity firm Thoma Bravo in February 2019 for $1.5 billion, and every private equity entrance needs to also have an exit strategy. It was just a matter of time before Thoma Bravo sought that exit.

The big question would have been whether ConnectWise would seek an IPO—an idea that it had explored previously—or another private equity sale. About a month ago, the buzz in the market seemed to indicate the company was testing the waters for an IPO. However, now the company seems to be talking to private equity about a sale. The name that keeps surfacing right now is Bain Capital. ConnectWise has not yet responded to our requests to confirm or deny the company's negotiations.

ConnectWise's Thoma Bravo 2019 Deal

At the time of that 2019 Thoma Bravo deal, ConnectWise's then-CEO Arnie Bellini told CRN that the deal was made to open the company to a larger pool of capital investment and to secure his exit strategy.

Bellini was succeeded as CEO by Jason Magee, who remains in that job today and also serves on the board of directors of ConnectWise. Other board members are all private equity representatives—eight from Thoma Bravo and one other private equity professional not affiliated with Thoma Bravo.

ConnectWise Acquisitions

ConnectWise has used that capital pool for a number of acquisitions, including:

ConnectWise Market Share

ConnectWise currently has about 40,000 managed service provider and technology service provider customers for its PSA and RMM platform, according to numbers posted on the company's website. That is the highest number of MSP customers of any of the MSP platform providers, making ConnectWise the leader in terms of market share.

But the company has been under pressure to cut costs. A graphic titled "PE cost-cutting hits RMM but MSPs expect growth" went viral on LinkedIn recently. Posted by Canalys chief analyst Jay McBain, the graphic shows that growth for PSA and RMM vendors—particularly the big ones—has dropped to the high single-digits "for the first time in memory." For Q4, the graphic shows ConnectWise's growth down to 6.1% year-over-year.

Impact of ConnectWise Sale on the MSP Market

ChannelE2E reached out to McBain to ask what a ConnectWise sale would indicate about the MSP market. Here's what he said:

We also asked what it would mean for MSPs. Here's what he said to that:

ChannelE2E will be following this story as it continues to unfold.