SolarWinds goes public again, with Silver Lake, Thoma Bravo, retaining control

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Shares of SolarWinds Corp. (NYSE: SWI) rose more than 3 percent in the enterprise software developer’s initial public offering on the morning of Oct. 19, giving it a market value of about $4.80 billion. It’s not the first time SolarWinds has been traded publicly. The company, which is highly acquisitive and boasts such clients as Accenture plc (NYSE: CAN), Chevron Corp. (NYSE: CVX) and Lockheed Martin Corp. (NYSE: LMT), was taken private in 2016 in a $4.5 billion deal by tech-focused private equity firms Thoma Bravo LLC and Silver Lake Partners. After the offering, Silver Lake and Thoma Bravo will own approximately 88 percent of the common stock, making SolarWinds a controlled company. Both firms are retaining board positions. Mergers & Acquisitions asked SolarWinds CEO Kevin Thompson to share his thoughts on the IPO journey.

Tell us about the journey from public to private to public again.
Thoma Bravo and Silver Lake Partners took the company private in 2016 with the intention of taking the company public when the company was ready to be a public company once again. Today we have completed that part of the journey, and SolarWinds is once again traded on the NYSE. We used the last two and a half years to aggressively and quickly make a number of additions to the company. Over the last two and a half years, we have almost doubled the revenues of the company and more than doubled the company’s level of profitability. At the same time, we have doubled our addressable market while making a very strong financial model even stronger, as we increased our subscription revenues more than six times and have driven our recurring revenues to 81 percent of total revenue while at the same time increasing our level of adjusted Ebitda margins to over 48 percent.

What role did your private equity backers play?
Silver Lake Partners and Thoma Bravo played a strategic part of helping us drive the expansion of our total addressable market (TAM) by actively supporting our M&A strategy. They gave us the freedom to make additions and changes to the business fast by taking some risk. They also have provided a huge amount of assistance in our financing strategy.

What role did acquisitions play?
We are a company that has developed a strategic and operational advantage in acquiring great technology and then putting it into our unique go-to market engine. M&A has allowed us to expand our TAM rapidly and provides us with the opportunity to continue to deliver consistent growth at a very high level of profitability over a long period of time.

What role will acquisitions play in in the future?
We will continue to look for great technology and great teams to add to the SolarWinds family. We will look for the opportunity to expand into additional new markets which we can disrupt with our unique model.

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