At first glance, some Intronis partners might be concerned about Barracuda's potential change of ownership. But here's the thing: There's no guarantee that Barracuda will be acquired. The company apparently has hired Morgan Stanley to solicit offers but no pending deals are on the table, according to Bloomberg. Also, Barracuda has not commented on the Bloomberg report.
If you're an Intronis MSP worried about a potential company sale, perhaps you're overreacting. After all, numerous MSP software companies will be up for sale in the coming years. The reason? A lengthy list of MSP-friendly software businesses are private equity owned, and that means those players will likely be sold at some point.
Private Equity And MSP Software Players
Indeed, private equity (PE) firms own Autotask, Continuum, Kaseya, StorageCraft and many others in the market. SolarWinds N-able is set to be private equity owned. Each business has its own strategy for growth. And each PE firm has an undisclosed timeline for ownership transitions -- perhaps through M&A, IPO or another type of financing deal.
Instead of trying to pinpoint ownership changes down the road, focus on a business's overall health. Many PE-owned firms will disclose clues about their growth and financial health. Sources close to Continuum, for instance, say the company was growing nearly 40 percent annually in 2015. And Autotask has stated that it's profitable and growing. Over at Kaseya, management insists a turnaround is underway. And at StorageCraft, new funding appears to set the stage for even faster growth.
Intronis MSPs and the Bigger Picture
Still, vague hints about financial growth and profits aren't the same as a quarterly financial statement. Also, dollars and cents may not reveal the strength -- or weakness -- of a company's channel partner program.
And that brings me back to the situation at Barracuda and Intronis. Before MSPs get nervous about a potential Barracuda company sale, consider these variables:
- Barracuda's Q3 revenues, announced Jan. 7, 2016, grew 14 percent to $80.1 million. And recurring revenue now represents 73 percent of total revenues. Those sound like solid data points that should give partners peace of mind. Still, Wall Street was disappointed by Barracuda's billings -- which caused the company's stock to fall more than 30 percent on the earnings news.
- Barracuda has only owned Intronis for a few months, but I sense that most of Intronis has functioned in a "business as usual" way -- maintaining a healthy focus on MSP recruitment, support and R&D. I haven't heard about any major slippage in those areas.
There's an old saying in business and relationships: If it ain't broke then don't fix it. In the case of Intronis, I sense that the business isn't broken. Generally speaking I think Barracuda management -- regardless of ownership -- will remain loyal to the Intronis MSP base.
If that changes or if Intronis somehow stumbles with its MSP efforts, I suspect readers will let me know (I'm all ears...) and we'll do some follow-up coverage. In the meantime, MSPs should keep an eye on Barracuda's potential sale -- if any bidders actually emerge -- but spend far more time focused on end-customers.
Remember: IT vendors get acquired and sold all the time. And the pace of M&A will surely accelerate in the years ahead, especially since so many PE owners will eventually seek to exit the MSP software businesses they're currently building.