Private equity firm Thoma Bravo is acquiring Barracuda Networks for $1.6 billion in cash, the two companies announced today. The deal, subject to regulatory and shareholder review, is expected to close before Barracuda's fiscal year end of Feb. 28, 2018.
Under terms of the deal, Barracuda will operate as a privately-held company with a continued focus on email security and management, network and application security, and data protection solutions that can be deployed in cloud and hybrid environments, the companies indicated.
Barracuda, while growing, also faces some key market inflection points. For instance, the company and many of its rivals have shifted from physical technologies to virtualized security appliances that run in Amazon Web Services and/or Microsoft Azure. Barracuda and those rivals are expected to offer updates during this week's Amazon AWS re:Invent conference in Las Vegas.
Barracuda CEO BJ Jenkins, an outspoken proponent of MSP-centric partner engagements, offered this perspective on the Thoma Bravo deal:
"We believe the proposed transaction offers an opportunity for us to accelerate our growth with our industry-leading security platform that's purpose-built for highly distributed, diverse cloud and hybrid environments. We will continue Barracuda's tradition of delivering easy-to-use, full-featured solutions that can be deployed in the way that makes sense for our customers. Thoma Bravo has an excellent history of investing in growing security businesses, and this transaction speaks to the value and strength of Barracuda's security platform, which helps customers protect and manage their networks, applications, and data. I expect that our employees, customers, and partners will benefit from this partnership."
During multiple quarterly earnings calls over the past year or so, Jenkins has repeatedly mentioned Barracuda's growing momentum with MSPs as sales partners into the SMB sector. The foundation for that momentum arrived when Barracuda acquired Intronis -- an MSP-centric cloud backup provider -- in late 2015.
MSP Technology Market: Consolidation, Overlap
The deal also gives Thoma Bravo a larger slice to the MSP-driven SMB technology market. Thoma Bravo already owns Continuum and SolarWinds. No doubt, overlap between the Thoma Bravo portfolio companies will increase as the MSP-centric technology market continues to consolidate. For instance:
- Continuum specializes in running RMM (remote monitoring and management), NOC (network operations center), BDR (backup and disaster recovery) and help desk services for MSPs in the SMB sector. The company also is testing a SOC (security operations center), with general availability expected sometime next year.
- SolarWinds, through the company's SolarWinds MSP arm, also offers RMM and BDR capabilities -- with an expanded portfolio of solutions under development.
- Barracuda, through its Barracuda MSP arm, has some BDR overlap with Continuum and SolarWinds in managed services partner sector.
Still, the physical lines between the Continuum, SolarWinds and Barracuda businesses remain firmly in place. Continuum and SolarWinds, for instance, are held in separate Thoma Bravo funds. And Barracuda is more of a data protection and security play, rather than an MSP-centric monitoring and management play.
Private Equity Firms in the MSP Technology Market
Meanwhile, additional private equity firms are active in the MSP-centric technology sector. Insight Venture Partners has owned Kaseya since 2013, and Vista Equity Partners is acquiring Datto -- then tucking Autotask into that company.
Pete Rawlinson
The folks at Datto certainly took note of today's Barracuda-Thoma Bravo deal. According to Datto Chief Marketing Officer Pete Rawlinson:
“Today’s news is a strong indication of the growing demand for MSP-centric solutions for storage and backup. The recent merger between Datto and Autotask puts us in a very strong position to address the backup and recovery needs of hundreds of thousands of small businesses globally through MSPs. I’m sure we haven’t seen the last of the activity in this market.”
More M&A involving private equity? That's a safe bet.
