Mergers and Acquisitions, Mergers and Acquisitions, MSP

SolarWinds, N-able, LogicNow Listen Closely to MSP Feedback

Amid SolarWinds' buyout of LogicNow, many MSPs are concerned about the deal's potential implications across the global managed services market. The early message back from SolarWinds: We're listening closely to the feedback, and we're taking it seriously.

For those who missed yesterday's breaking news, SolarWinds has acquired LogicNow, merging it with the N-able business. the resulting business division is now called SolarWinds MSP. The deal wasn't an overnight brainstorm. Sources say both sides have considered a business combination multiple times in recent years.

But it sounds like the timing was never quite right -- until after SolarWinds itself was acquired by a private equity firm in late 2015. Free from public markets, SolarWinds and its private equity owners could focus on building long-term value rather than worrying about penny-per-share earnings demands from Wall Street. That cloak of privacy and long-term view apparently allowed the duo to rekindle M&A discussions in recent months, ChannelE2E believes.

SolarWinds Buys LogicNow: MSP Installed Base

By bringing N-able and LogicNow together, the SolarWinds MSP division will support 20,000 MSPs. Those MSPs, in turn, are managing 400,000 small and midsize business customers and 5 million endpoints, according to Walter Scott, executive VP of SolarWinds MSP and formerly CEO of LogicNow.

I suspect the combined MSP-focused business likely has about 400 engineers focused on R&D. Scott and the executive team will need to work carefully as they seek to integrate a range of products that bolster IT automation on monetization opportunities for MSPs. While some MSPs worry about certain N-able or LogicNow products disappearing during the M&A process, SolarWinds has stated that it has no plans to sunset any products within SolarWinds MSP.

SolarWinds M&A Track Record

I gotta concede: I'm often a bit skeptical when "mergers of equals" (business units of roughly the same size) occur in the IT market. The result often involves culture and technology turf wars. And in this case, I believe, the N-able and LogicNow teams within SolarWinds are roughly the same size.

But here's the twist in this deal: The executive teams within SolarWinds, N-able and LogicNow have extensive M&A experience. SolarWinds's 2013 buyout of N-able has performed far better than any critic would have expected. SolarWinds CEO Kevin Thompson essentially had a "do no harm" approach to the N-able business upon acquisition, allowing GM JP Jauvin and Senior VP of Sales Mike Cullen to build the SolarWinds N-able business according to long-term MSPs' needs -- rather than short-term Wall Street revenue demands.

Fast forward to SolarWinds' buyout of LogicNow, and a similar "do no harm" approach is expected, sources say. In fact, many SolarWinds, N-able and LogicNow executives apparently spent last night fielding phone calls, emails and social media conversations with MSPs -- assuring them that SolarWinds MSP remains focused on service provider needs.

SolarWinds Buys LogicNow: Deal Complexity

Still, the current SolarWinds/LogicNow business combination is more complex than the SolarWinds/N-able deal from 2013. The 2013 deal was a tuck-in with few overlapping products and team resources. The current SolarWinds/LogicNow deal has some overlap (particularly in RMM, remote monitoring and management) and organizes a far larger MSP software portfolio under one roof.

Instead of huddling privately to sort out the strategy, it sounds like SolarWinds is in listen mode -- and will remain in listen mode, assuring MSPs that their platform investments are protected, with new innovations on the way.

Stay tuned for ongoing coverage of this deal.

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.