Mergers and Acquisitions, Channel technologies, Channel partner programs, IT management

LANDESK, HEAT Software Merger: CEO Steve Daly’s Channel Strategy


When Clearlake Capital Capital confirmed plans to acquire LANDESK and merge it with HEAT Software earlier this month, some skeptics could have said "here we go again." After all, LANDESK has been acquired and sold multiple times since the 1990s. But take a closer look, and the IT asset management software company apparently has momentum heading into the HEAT merger.

During a call with ChannelE2E today, LANDESK CEO Steve Daly shared more details about the ownership transition, HEAT merger, product strategy, and partner program priorities. The deal is expected to be finalized sometime this month, with a new corporate name to be unveiled at that time.

Yes, LANDESK has had multiple owners over the past two decades. But the past six years have involved steady ownership (under the Thoma Bravo private equity banner) and major investments, including at least seven acquisitions since 2011 or so. Still, LANDESK was looking to make an even bigger splash in the IT systems management market.

M&A Market Activity

Among the key deals that LANDESK monitored closely: Clearlake Capital's February 2015 deal to acquire FrontRange and merge it with Lumension. The resulting company was HEAT Software. At the time, LANDESK didn't have the bandwidth to muscle in on a deal of that size, especially since LANDESK was already busy digesting and managing its own M&A deals -- including the VMware Protect (i.e., Shavlik) portfolio.

Fast forward to mid-2015 or so. LANDESK and HEAT Software, along with their owners at the time (Thoma Bravo and Clearlake), were closely monitoring each other for more synergies. Each of the software players had been "dancing" with each other to explore potential M&A deals as far back as 2013. But real conversations started about 18 months ago, and the actual deal came together very quickly, according to Daly.

Among the key discussion points: Should LANDESK buy HEAT from Clearlake, or should Clearlake buy LANDESK and put that company together with HEAT? The latter approach ultimately became the path forward, and basic deal terms were in place by November 2016, Daly says.

LANDESK: Current Momentum

As LANDESK and Heat come together, "we're in great position," Daly asserts. The reason: LANDESK, under former owner Thoma Bravo, truly found its focus on the end user and lifecycle management, he says. Indeed, the company's IT service management solution spans four areas:

Under Clearlake's ownership going forward, the LANDESK-HEAT merger is "very complimentary. It gives us scale and the ability to make investments."

LANDESK doesn't disclose financial results so it's difficult to track the company's actual progress in recent years. But here's an anecdote that shows growth and scale: Once the LANDESK-HEAT merger is complete, LANDESK will employ about 1,600 to 2,000 people -- about three times more than the 600 employees LANDESK had when Thoma Bravo acquired the business back in 2010, Daly says.

LANDESK Partner Program, Priorities

Roughly 80 percent of LANDESK's business flows through channel partners. The diverse partner base ranges from major PC makers to big global systems integrators like CSC and Fujitsu. HEAT's partner program is a bit less mature. But Daly praises the HEAT team for launching the program about 18 months ago. He's particularly impressed with HEAT's cloud platform, and an associated MSP partner program that has been emerging in recent months.

The channel is "a big part of our strategy," he says. "We can't scale the business and hire people" fast enough to match the channel's performance and capabilities, he adds. Among the key priorities: Leveraging HEAT's learnings in the MSP market and applying that to the broader LANDESK partner program.

Daly's broader corporate priorities include:

  1. Do no harm to employees: "A lot of our focus starts with employees within HEAT. We'll make sure we welcome them to LANDESK. People are the intellectual power of software companies."
  2. Do no harm to customers: "We'll be asking ourselves, 'How do we help our customers and make sure nobody gets left behind as we bring things together?' We're assessing that now."
  3. Focus on total lifecycle solutions: "The way IT has been managing and securing endpoints is a flawed model. It’s a very fragmented model with handoffs and integrations. Our strategy and vision was to bring things together in and deliver integrated lifecycle management." That means LANDESK will help to automate how people and their IT devices are onboarded, provisioned, secured, managed and off-boarded when necessary.

Plus, there's that other big development: Finalizing the LANDESK-HEAT merger and unveiling a new corporate name. Those moves are expected to arrive as soon as this month. Once the deal is finalized and a new name arrives, we'll take a closer look at the company's competitive set, opportunities and challenges.

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.