When Thoma Bravo acquired Continuum today, it reinforced a clear fact: Private Equity (PE) investments continue to dominate the MSP software category.
Indeed, four of the five major MSP software providers remain backed by private equity ownership. Generally speaking, private equity firms typically hold onto companies for five to seven years before selling them to another PE firm, a strategic buyer (i.e., a technology company) or perhaps even pursuing an IPO.
Here's a look at each of the top five MSP software providers, their ownership status, and their next potential step (according to my best guesses about each company's future direction).
Autotask: Acquired by Vista Equity Partners in June 2014 for a rumored $99 million. I think revenues were about $20 million at that point (just a rumor). CEO Mark Cattini has expanded the company from PSA to RMM, file sharing and more. I believe the company now claims to be roughly four times larger, though I can't really offer a valuation figure on that estimate because I don't know how Autotask's profitability has evolved. If I had to guess, Autotask could be acquired by another PE firm in 2019 or beyond.
Continuum: Owned by Summit Partners from 2011 through 2017. It's a safe bet new owner Thoma Bravo will take a long-term view, which means the next ownership transition won't arrive until 2022 to 2024 or so. CEO Michael George and the current executive team say they're in for the long haul. Key priorities: Building out a Security Operations Center (SOC) that extends Continuum's offerings beyond RMM, BDR, NOC and help desk services.
ConnectWise: Of the big five MSP software companies, only ConnectWise is owned by its founding executives -- brothers Arnie and David Bellini. ConnectWise also has a range of shareholders, I believe, some of whom joined the company through major investments (LabTech Software, Quosal) that were later reorganized into a single company structure. ConnectWise is debt free, I believe. There are rumblings from time to time about a potential IPO or perhaps taking PE money to further accelerate growth. My best guess? I'm clueless on this one.
Kaseya: Insight Venture Partners acquired Kaseya in 2013. Kaseya initially struggled amid management, ownership and product changes. The business began to stabilize once CEO Fred Voccola arrived in mid-2015. Looking ahead, Kaseya hopes to pursue a potential IPO filing in late 2018. But the more I think about it, I suspect such a move would be a test balloon -- designed to attract potential suitors to the negotiating table to potentially buy Kaseya outright from Insight. Assuming my theory is correct, I suspect Kaseya will therefore be acquired in 2018 by either a strategic buyer (i.e., technology company) or another PE firm.
SolarWinds: Silver Lake Partners and Thoma Bravo acquired SolarWinds and took the company private in a $4.5 billion deal back in 2015. SolarWinds later acquired LogicNow and merged the assets with N-able Technologies to form the SolarWinds MSP division. SolarWinds has been publicly held before, so I suspect the long-term goal is to launch another IPO between 2020 and 2022.
Those are my best guesses about future ownership directions. Got a differing view? Post a comment or email me. [email protected].