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ConnectWise Finally Accepts Private Equity, Preps Job Cuts
… workers affected by the layoffs polish their resumes, land interviews and connect with recruiters.
“These are all great, very talented people,” says Bellini with confidence. “They’ll be scooped up very quickly. We’re putting money, time and effort in making sure they’re getting to their next opportunity.”
On the flip side, the deal will make about 70 ConnectWise employees millionaires. The 100 percent-employee-owned company will distribute $270 million amongst non-founder workers.
Magee says that it will be business as usual when he assumes the CEO role, with a continued focus on cybersecurity solutions, product integrations and as-a-service technology.
“I’ll wear flashier suits and have a lot of energy,” laughs Magee. “But otherwise it’s going to be a lot more of the same. We’re going to execute on the strategy that Arnie and I have outlined for the company the last three to five years.”
As for Bellini, he says he’ll continue to be heavily involved with the company from his seat on the board and role as strategic adviser, but that he has big plans for all the free time he’s about to have.
“I won’t have as much to do, so my challenge will be to swim from Europe to Africa across the Strait of Gibraltar,” he tells us. “Jason said I couldn’t do it until I wasn’t CEO.”
I’m not so sure that all of this consolidation is so great for the MSP industry. When you have financial masters to answer to, your 1st priority is going to be to meet the financial goals that master has defined. When we see companies go public, they automatically incur a few percentage points of inefficiency in order to meet compliance requirements – so that layer of non profitable operation needs to be sliced out of somewhere else – and that somewhere else is often at the pointy end of the business – where that business touches their customers. Suddenly experienced account managers are let go, or “promoted.” Margins get cut, requirements to stay in the game become more onerous as the business wants to have more control over everything.
I really hope this doesn’t happen, but it is a possibility that I’m sure the team at CW thought long and hard about. Perhaps their culture can win out and they can really put the infusion of capital to work for the better and continue to dominate the PSA market. Part of the article talks of cuts (overall) in staff, but I don’t see it, given how much CW has grown over the years, that they will ever end up reducing headcount. That 40ish staff they are talking about being excess in this article? There are more than that many job openings right now.
I have some ideas on where their increased dev funds could be spent that would propel them further into the lead and watch everyone else play catch up.
There sure are a lot of MSPs that agree with you. The Reddit threads & social platforms are full of worries about whether or not this will result in cuts to customer support, especially, which is already a source of concern for a lot of CW partners. Bellini says those job cuts will turn into openings in years 2-5 of this five-year “realignment” plan, but given how fast all providers need to spin up more advanced security products, services & support, not to mention CW’s stated mission to make security a key pillar of their business strategy moving forward (like everyone else), I can’t imagine them not creating room to invest in that very expensive talent. Still, to your point, private equity is typically very focused on “expense management” (i.e. cutting costs to achieve a certain P&L and make up for the debt incurred with a buyout of this size). CW has had quite a few acquisitions, and Bellini/Magee have a valid point that it’s time to trim some fat and get all the businesses working in sync. But that can’t solely come from job cuts. It’s gotta come from somewhere else–we’ll just have to see, but your worries are shared by many.