When Silver Lake Partners and Thoma Bravo acquired SolarWinds and N-able for $4.5 billion today, the deal marked the latest private equity firms buying MSP and IT management software companies. The big question: Is all this private equity money healthy for channel partners, MSPs and their software platform suppliers?
In case you haven't been keeping score: Over the past two to three years, private equity firms have acquired the following MSP-centric software and cloud companies:
Private Equity-Owned MSP Software: Recent Performance
Overall, the PE track record within the MSP software market looks pretty good. In particular:
- Autotask has successfully expanded its business worldwide, and also acquired CentraStage for RMM capabilities. Some pundits wonder, however, if the company has managed to achieve strong profits amid the global investments for growth.
- GFI successfully re-positioned its MSP software and cloud business as LogicNow, one of the largest providers of cloud-based tools for MSPs. More recently, the company has launched big data-driven tools to help MSPs predict future company needs.
- Kaseya successfully acquired a range of IT management tools for mobile device management and more. The company hit some product quality bumps along the way, but sources say the overall product development effort has improved in recent months.
- Zenith RMM escaped from an imploding parent (Zenith Infotech), rebranded itself as Continuum, and successfully rebuilt its RMM and NOC businesses while pushing into BDR and more. Sources say Continuum is on pace to grow as much as 40 percent this year, though CEO Michael George declined comment about the figure to ChannelE2E in September.
- Whom did I miss?
Note: Generally speaking, all of the companies above will be sold again -- though there's a chance some will IPO -- in order for the PE firms to generate a return on their investment.
How Will SolarWinds N-able Perform?
Now comes the buyout of SolarWinds and its N-able division. ChannelE2E is checking to see if SolarWinds' two owners (Silver Lake and Thoma Bravo) intend to keep the company whole. Last week, there was a rumor that N-able would be spun off, though I questioned the rumor since SolarWinds has made acquisitions to further bolster N-able's performance.
Overall, SolarWinds is a very healthy company -- though recent growth rates didn't keep up with Wall Street's lofty expectations.