It’s official: SolarWinds on Monday submitted a draft registration statement to the SEC for a proposed initial public offering (IPO). Private equity firms Thomas Bravo and Silver Lake Partners acquired the IT and MSP management software provider two-and-a-half years ago for $4.5 billion, taking it out of the public markets.
Two years ago, SolarWinds purchased LOGICNow and brought it together with SolarWinds N-Able to create SolarWinds MSP, which focuses on delivering solutions such as remote monitoring and management (RMM), backup and disaster recovery (BDR), help desk, and risk intelligence to managed service providers (MSPs).
There aren’t a lot of public companies in the MSP and IT management space. SolarWinds competitors such as Kaseya, ConnectWise, Autotask and Continuum are all privately held, allowing them theoretically to pivot more quickly to address marketing changes. But we’re seeing a significant uptick in market repositioning, such as M&As and IPOs in the channel as private-equity firms capitalize on the MSP opportunity.
Partners are turning to MSP-centric software providers to help them increase operational efficiencies in an era when they’re being asked to manage more data and endpoints than ever before — with the same amount of resources and operating budgets. SolarWinds has been busy updating its cloud portfolio and other offerings, easing integrations and moving toward that true “single pane of glass” for technicians. The cash generated by an IPO may give the company an R&D edge, allowing it to further help MSPs stop hemorrhaging profits by wasting time and effort.
“While all businesses struggle to achieve efficiencies in their increasingly complex IT environments, managed service providers are also challenged to deliver scalable, reliable solutions to their customers,” Christoph Pfister, executive vice president of products at SolarWinds, told Channel Futures. “Without the proper monitoring strategy and deep visibility to manage and monitor additional data streams from hybrid infrastructure and applications, MSPs will struggle to troubleshoot and achieve operational efficiency.”
Will partners see an increase in legacy RMM and other software pricing once SolarWinds has to perform to shareholder expectations? Public companies can be notoriously difficult to turn, and they must worry not only about customers but also about investors, whose goals can often be diametrically opposed.
Or will the influx of cash be the impetus the company needs to pull ahead of its privately held competitors? The financial details of the IPO have yet to be released, but it’s as good a time as any we’ve seen in the last few years for a channel IPO, and expecting a decent share price isn’t unfounded.