Thoma Bravo buys cybersecurity provider SailPoint for second time in $6.9B deal

Thoma Bravo buys cybersecurity provider SailPoint for second time in $6.9B deal

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Private equity firm Thoma Bravo LLC today announced that it has inked a $6.9 billion deal to acquire SailPoint Technologies Holdings Inc., a publicly traded cybersecurity provider. 

The transaction marks the second time SailPoint is being acquired by Thoma Bravo. The previous deal occurred in 2014. That year, Thoma Bravo bought a majority stake in SailPoint as part of a transaction reportedly valued at “several hundred million dollars”. 

Thoma Bravo took SailPoint public on the New York Stock Exchange in 2017. SailPoint achieved a market capitalization of $1.18 billion in its first day of trading. The fact that Thoma Bravo is now spending nearly six times what SailPoint was worth at the time of its initial public offering to buy it back reflects the growth the company has experienced since.

SailPoint provides an identity security platform that enterprises use to manage how workers access business applications. Using SailPoint’s platform, a company can ensure that employees only have access to the applications and data they require for their work. This might mean, for example, ensuring that members of the data center storage team don’t have access to the administrative tools used by the data center networking team and vice versa. 

Managing how staffers access applications can involve a significant amount of manual work in a large company. To ease the task, SailPoint provides a set of automation features as part of its platform.

SailPoint’s platform can automatically set application access permissions for employees based on each worker’s role. If a worker’s role changes, SailPoint can adjust application access permissions accordingly. The company uses artificial intelligence to automate additional manual tasks, such as detecting cybersecurity weak points that could potentially be used by hackers to launch cyberattacks.

When Thoma Bravo took SailPoint public in 2017, the company generated annual revenues of about $118.3 million. In its 2021 fiscal year, SailPoint achieved revenues of $439 million.

SailPoint’s sales growth is driven in significant part by its software-as-a-service business. The company, like other enterprise software providers, has in recent years worked to refocus from selling licenses to selling subscriptions. SailPoint’s subscription revenue jumped 41% in the fourth quarter, to $78.8 million, and now accounts for more than half of its total revenues.

A source told Axios that Thoma Bravo plans to complete SailPoint’s shift to a software-as-a-service business model after the acquisition completes. Additionally, the investment firm reportedly intends to “help SailPoint become a consolidator” of the identity access management market. This may mean that SailPoint will buy other companies with complementary or competing products.

“This transaction delivers significant immediate cash value to our stockholders and maximizes the value of their shares,” stated SailPoint founder and Chief Executive Officer Mark McClain. “The transaction will also allow us to pursue our long-term growth trajectory with greater flexibility and effectiveness to support our customers, expand our markets, and accelerate innovation in identity security with the backing of a strong financial partner with deep sector expertise.” 

Thoma Bravo expects to complete the acquisition in the second half of 2022. A go-shop clause in the acquisition agreement gives SailPoint 35 days to consider any competing buyout offers that may be submitted by other bidders. If Thoma Bravo’s bid is approved, SailPoint investors will receive $65.25 per share in cash, which represents a more than 31% premium to the Friday closing price of the company’s stock. 

Thoma Bravo’s acquisition of SailPoint comes weeks after it inked a deal to buy another major enterprise software provider. Last month, the private equity firm agreed to purchase business planning provider Anaplan Inc. for $10.7 billion. Anaplan’s software helps companies with tasks such as optimizing supply chain operations and forecasting revenue.

Thoma Bravo’s recent acquisitions follow a year in which private equity firms increased their focus on the enterprise software segment. Between January 2021 and July 2021 alone, private equity firms invested an estimated $16.1 billion into the segment, up from $13.2 billion in all of 2020.

Image: SailPoint

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