Dynatrace IPO: IT Management Software, Private Equity Implications -

Thoma Bravo is exploring a potential Dynatrace IPO (initial public offering) or company sale that would value the IT management software business at roughly $4 billion, according to Bloomberg.

The potential Dynatrace sale or IPO has important implications across multiple markets -- including private equity, IT management software, application performance management (APM), and artificial intelligence operations, Managed IT service providers (MSPs) should be watching closely, too.

Thoma Bravo acquired Dynatrace, formally known as the Compuware APM group in 2014. At the time, Dynatrace was best known for its APM technology -- competing against fast-growing upstarts like AppDynamics (since acquired by Cisco Systems) and New Relic (IPOed in December 2014). More recent rivals include Datadog (still privately held).

Potential Dynatrace IPO or Company Sale: APM Market Evolution

The APM market has grown and evolved in multiple directions. Numerous rivals now offer APM coupled with monitoring (infrastructure, networks, security), log management and more. For its part, Dynatrace now pitches a "software intelligence platform" across APM, cloud infrastructure monitoring, AIOps and digital experience management.

When ChannelE2E launched in 2014, we expected APM platforms to converge with MSP-centric RMM (remote monitoring and management) software tools. So far, that trend hasn't occurred in any major way -- though we are seeing some signs of the convergence. For instance, SolarWinds and its SolarWinds MSP arm offer a portfolio of APM, network and RMM solutions. And APM providers New Relic and Datadog have caught on with some larger MSPs -- especially the Top 100 public cloud MSPs, which typically support Amazon Web Services, Google Cloud Platform and/or Microsoft Azure customers.

Potential Dynatrace IPO or Company Sale: MSP and Partner Implications

No doubt, a lengthy list of technology companies and private equity firms is closely tracking Thoma Bravo's potential plans for Dynatrace. Any type of sale, exit or IPO could have major implications across the IT management sector. MSPs should be paying close attention, too.

Among the reasons:

Thoma Bravo also owns ConnectWise, Continuum and a piece of SolarWinds (which returned to public markets in 2018). Also, Continuum is reportedly up for sale again.

Rival private equity firm Vista Equity Partners owns Datto, LogicMonitor, and other MSP-friendly technology companies.

Insight Venture Partners owns Kaseya and many other tech firms.

Thoma Bravo has raised roughly $12.8 billion for more enterprise software acquisitions, and Vista Equity is raising $16 billion for more acquisitions.

Roll all that together, and a lot of MSP-friendly technology companies could be acquired, sold or rolled together in the months ahead. In addition to potential IPOs, watch for companies such as KRR (owner of BMC and Cherwell Software) to potentially be a buyer.

Also, publicly held Broadcom acquired CA Technologies in 2018 -- and an enterprise-class IT management acquisition could be a nice add-on.