Austin-based cybersecurity company SailPoint is being acquired by private equity firm Thoma Bravo for $6.9 billion, the company announced Monday.
SailPoint was founded in 2005 by Austin tech industry veteranMark McClain. The company specializes in identity and access management software, and went public in 2017 with an initial public offering of$240 million.
Thoma Bravo had been the majority stakeholder in the company when SailPoint went public, but no longer was by the end of 2018. In this latest deal, the equity firm will acquire SailPoint in an all cash transaction that is expected to close in the second half of 2022.Thoma Bravo plans to take SailPoint private after the transaction closes.
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McClain, SailPoint CEO, said identity security is core to cybersecurity and businesses are realizing that it is a necessity for business growth.
“We've experienced rapid growth and see a tremendous opportunity ahead of us to continue to set the pace in the identity security market as the category leader," McClain said in a written statement. "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.”
McClain saidthe transaction will also give the company stockholders immediate cash value and will maximize the value of their shares. Shareholders will receive $65.25 per share in cash, the company said.The company's stock rose nearly 30% Monday morning, reaching a high of $64.39, following the news.
Andrew Almeida, a partner at Thoma Bravo, said SailPoint is a clear leader in identity security software.
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"As digital transformation becomes imperative for enterprises of all sizes to remain competitive, SailPoint’s innovative products provide the foundation for a robust security infrastructure that keeps employees and sensitive information safe," Almeida said.We are excited to leverage Thoma Bravo’s deep software and operational capabilities to support SailPoint’s mission to be the de facto identity security platform player of choice."
Last year SailPoint reported revenue of $439 million, with fourth-quarter revenue growth across its product offerings. At the time McClain said the company’s performance reinforced the belief that security-as-service-based identity security is a priority for large enterprise customers.For 2022, the company predicted revenue of $513millionto$521million.
“SaaS-based identity security is a top investment priority for enterprises that is growing even faster than we anticipated," McClain said in a statement in thecompany's earnings release. "We expect another strong year of growth in 2022 and will be investing in our product development and go-to-market teams to enable us to fully capitalize on our market opportunity over the long-term.”
Amber Gunst, CEO of the Austin Technology Council, said the acquisition helps pave a path for other growing Austin-based companies.
"The success of SailPoint not only points to continued growth for the company and opportunities for job creation in Austin, it serves as inspiration to entrepreneurs in how far they can take a company when they are focused on building companies for longevity and not a quick exit,” Gunst said. “Mark and his team have built an outstanding company and we should all aspire to what they have accomplished."
SailPoint's roots can be traced to Austin software makerTivoli Systems, where McClain and a number of the company's founding executives held top roles. Tivoli, which was acquired by IBM in 1996, was one of Austin's first break-out software companies and introduced an entrepreneurial culture that paved the way for a new generation of startups.
Since its founding, SailPoint has grownby focusing on corporate softwaresoftware-as-a-service,which lets companies pay for software through a subscription and access services over the Web. The company continued expanding, even as investors turned their attention to flashier social media startups, McClain told the Statesman in 2010.
"Venture capitalists have been jittery about returns on enterprise software. It does take a lot more money to build enterprise software than to create an iPhone app," he said. "You can build a social media feature for $200 grand and hope Twitter or Facebook will pick you up for $10 millionor $20 million. Investors can make lots of bets on social media startups for what it takes to build one enterprise software company."
What was overlooked, McClain said, is that corporations want the innovation that comes from startups — and they're willing to pay for it.
"There has been so much overinvestment in social media startups that still haven't figured out how to make money," he said. "That's not a problem for enterprise software developers because big companies still spend a lot of money on technology."
Today, SailPointhas more than 1,850 customers inindustries including financial services, government, education, manufacturing and healthcare, according to marketing firm Enlyft.
SailPoint is one of the largestacquisitions of an Austin company in recent years. Other billion-plusdeals include homegrown grocer Whole Foods Market, which agreed to be acquired by e-commerce giant Amazon in 2017 in a deal valued at $13.8 billion.
In 2016, online travel site Expedia bought Austin-based online vacation rental company HomeAway for $3.9 billion in cash and stock, while software maker SolarWinds was sold toThoma Bravoand Silver Lake Partners for$4.5 billion.SolarWinds returned to the public markets with a $375 million IPO in October 2018.
Meanwhile, Austin-based Freescale Semiconductor was acquired in 2015 by Dutch chipmaker NXP in an $11.8 billion deal.
