Private equity, Mergers and Acquisitions, MSP, Content

Thoma Bravo Acquires ConnectWise for Roughly $1.5 Billion, ChannelE2E Estimates

Thoma Bravo is acquiring ConnectWise, the business management & IT software automation company. Financial terms were not disclosed. However, ChannelE2E estimates that Thoma Bravo paid approximately $1.5 billion for ConnectWise, according to our previous reporting, coupled with previous IT Nation conference keynote information and other publicly available information.

Jason Magee succeeds ConnectWise CEO Arnie Bellini, who is transitioning into an advisory role at the MSP (managed IT services provider) software company. The deal will close on February 28, the companies say.

Thoma Bravo Acquires ConnectWise: Complete Coverage & Analysis

Our complete analysis of the deal includes:

Thoma Bravo Acquires ConnectWise: The Background

ChannelE2E hinted in a February 4 blog that the landmark deal was imminent. The companies confirmed the deal to ChannelE2E on February 19 under embargo, and publicly announced the buyout on February 25. Financial terms were not disclosed.

Thoma Bravo paid approximately $1.5 billion for ConnectWise, ChannelE2E estimates based on our research and long-term reporting in the industry. What's the math? Here are the clues:

  • ConnectWise did not disclose the deal's value, but the company did confirm $270 million from the sale will go to employee shareholders.
  • Bellini previously disclosed during an IT Nation speech how much of the company stock is held by employees compared to company founders. We believe the ratio of employee-to-founder stock ownership levels has remained steady since that time.
  • Additional background figures surfaced in this Tampa Bay Business Journal article from 2018.
  • Roll all those vague hints from us together, and you get to the $1.5 billion valuation ballpark, ChannelE2E estimates.

Thoma Bravo Acquires ConnectWise: Fast Facts

Some key factoids about the deal, according to Thoma Bravo and ConnectWise, and our interview with Magee and Bellini:

  • The software company remains committed to driving partner success and growth.
  • The firm will pursue organic growth and strategic acquisitions (although ConnectWise does not have any imminent M&A deals planned, since the company is still digesting HTG and Sierra Group).
  • Key focus areas remain everything as a service, cybersecurity and partner education that improves business performance.
  • After leading the business for 37 years, Arnie Bellini is transitioning into an advisory role to the company.
  • President and COO Jason Magee shifts to CEO.
  • Over the past three years, ConnectWise's EBITDA rose at an 81 percent compound annual growth rate (CAGR), and revenue had a 21 percent CAGR. Magee led the company's day-to-day operations during that growth.
  • There are some staff cuts -- about 110 positions are being eliminated, or roughly 10 percent of the workforce, ChannelE2E estimates -- amid the buyout. But the company is also looking to make about 70 hires in additional areas amid a more aggressive push into SaaS and security.
  • Recent rumors about ConnectWise potentially merging with peer Thoma Bravo companies (such as Continuum) are false, Bellini tells ChannelE2E.

Track all coverage about the deal here.

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.