The acquisitions have started early in 2017. It is only the fourth of January and we have our first major deal. The private investment firm Clearlake Capital has just shelled out a cool $1.1 billion for LANDESK.
In the past few years, LANDESK carved out a niche in the user virtualization market space, acquiring its major competitor and market leader AppSense in 2016, Xtraction Solutions in 2015, Naurtech and LetMoblie in 2014, and Shavlik from VMware in 2013.
Clearlake Capital has agreed to acquire LANDESK for a believed $1.1 billion in cash from Thoma Bravo and will be merging the company with its other UEM asset, HEAT Software USA.
The newly merged company, which is yet to be named, will be led by LANDESK CEO Steve Daly and headquartered in Utah. Current HEAT CEO and Clearlake Operating Advisor John Ferron will serve as the executive chairman of the newly merged company’s board.
What Is the Synchronicity in This Merger?
LANDESK, based out of South Jordan, Utah, delivers products that help companies manage online security and information technology services across desktop, laptop, and mobile devices, as well as through server platforms and operating systems.
HEAT Software, based in Milpitas, California, writes software to help companies manage their endpoint security and optimize their IT service support and enterprise mobility management. HEAT was created by Clearlake in 2015 by merging its FrontRange Solutions acquisition with Lumension Security, which it had purchased earlier in 2014.
Daly said in a prepared statement that “LANDESK and HEAT [both] specialize in IT management, cloud-based service management, and unified endpoint manangement, [and] the company is expected to grow organically and through acquisition.”
What Exactly Does This Mean?
With the assets of LANDESK, mainly AppSense and Shavlik, the newly minted company will be a world leader in endpoint security and management. What is interesting is that this will be from the perspective of the user rather than the device. By protecting the user, you make the end device much more throwaway. Any gaps in this portfolio will be obtained via acquisition rather than being developed in-house.
What Does This Mean to a Customer?
Consider this: the user’s personality is encapsulated in AppSense UEM in a device-independent manner and delivered upon logon to disparate devices in a consistent manner. Those devices are refreshed upon logout via Shavlik to a clean state. The endpoints are protected by EMM (enterprise mobility management); endpoint protection from HEAT provides application whitelisting, port control, etc. This is quite a compelling story, if they can pull it off.
This is an interesting acquisition/merger. It brings together some of the players in the fledgling/stalling user environment and endpoint management space to start to create a powerhouse that could, if everything gels, provide ubiquitous endpoint protection for both device and user.
What is more interesting is that it is yet another private equity investment that has been fully funded by Morgan Stanley, Barclays, Jefferies, Macquarie, Golub Capital, and Nomura. I feel that this is going to be the lead for growth for companies looking for an exit this year and onward. The tech market IPO exit has not been that safe a bet recently. Wall Street darlings like Pure and Nutanix have not kept up their share price as expected; they are trading below their opening price due to various issues, such as Pure’s failure to get a valid second product to market and Nutanix’s failure to get control over spiraling costs.
The reporting requirements for listed companies are onerous, and the tiring quarterly reporting often unfairly highlights a company’s position as a weakness. The annual reporting structure of a private company only puts them in the shop window a single time a year as opposed to four.
Yes, a private investor is still interested in making a profit on its investment, but it tends to be there for the long term. Also, private investors tend to be more understanding of the business and its needs in terms of research and development and expenditure that does not immediately lead to a bottom-line increase.
We believe that this year will be a year of mergers and buyouts that will not be kind to the fledgling storage industry. Many will fall by the wayside, their assets acquired by incumbent companies. Others may merge, possibly with other startups, in an attempt to increase the reach of their niche solutions. The fourth of January is early to call this, but we will see.