Private equity investor Thoma Bravo has reached a definitive agreement to sell Barracuda Networks to fellow investment heavyweight KKR.
Terms of the deal, which is expected to close by the end of the year, were not disclosed.
The change of ownership will help Barracuda progress from the transformation phase of its evolution to acceleration, according to CEO Hatem Naguib in a conversation with ChannelPro.
“Our work with KKR will involve leveraging their strategic resources, their investments, and their global scale in order to really help the business grow,” he says. “They bring a lot of resources to bear to be able to help us in that part of the strategy.”
They also have a long history of nurturing growth phase businesses, he continues.
“They’ve invested a lot in cybersecurity, and they understand the small to medium enterprise space very well,” Naguib says. “They look at us as being a platform by which to deliver cybersecurity to our small to medium enterprise customers, along with the MSP component that we have.”
That component dates back to Barracuda’s 2015 acquisition of Intronis, a maker of data protection solutions for MSPs, and took significant steps forward with the official launch of the company’s Barracuda MSP unit in 2017, its acquisition of the Managed Workplace RMM system (rebranded Barracuda RMM last March) from Avast Business in 2019, and its purchase last year of managed detection and response vendor SKOUT Cybersecurity.
Annual recurring revenue for Barracuda MSP’s security solutions grew 37% year-over-year through September 2021 and ARR for the MSP unit’s email security solutions specifically grew 73% year-over-year during the same period, per a Barracuda press release issued late last year. Sustaining that momentum, Naguib says, will be one of KKR’s priorities for its new holding.
“They’re keenly interested in making sure that we grow our MSP business,” he says.
For Barracuda’s MSP and reseller partners alike, Naguib adds, the move from Thoma Bravo to KKR should change little.
“It’s business as usual for our partners,” he says. “They will continue to get our solutions, they will continue to get our best-in-class support, and they will continue to get engagement from us in order to make sure that we’re delivering to our customers through our partners.”
In particular, partners will remain the company’s preferred route to market, Naguib emphasizes. “We have a partner-first strategy and always will with the channel to make sure that Barracuda solutions give the highest-level value to our customers.”
Thoma Bravo bought Barracuda, which was then publicly listed, in 2018. In the four years since then, Barracuda’s top line has climbed past $500 million, an accomplishment that wouldn’t have been possible without the private equity firm’s assistance, according to Naguib.
“They helped us really optimize and get scale working with our channel partners,” he says. “They helped us migrate a lot of our infrastructure so that we could support our customers in a SaaS, cloud-first way and optimize that infrastructure for scale worldwide.”
“We are proud to have supported Barracuda to innovate and grow its security solutions portfolio, expand its customer base and achieve considerable operational improvements and revenue growth,” said Chip Virnig, a partner at Thoma Bravo, in prepared remarks. “We look forward to watching Barracuda’s continued success.”
The Barracuda sale will leave Thoma Bravo with significant cybersecurity holdings in its portfolio, including Sophos (which it bought for $3.9 billion in 2019), Proofpoint (acquired for $12.3 billion a year ago), and identity security vendor SailPoint, which it bought for $6.9 billion yesterday.
ConnectWise, another Thoma Bravo property since 2019, has an extensive family of security offerings as well.
KKR, for its part, will add Barracuda to a list of security holdings that includes Ping, Cylance, DarkTrace, ForgeRock, KnowBe4, and Optiv.
“Barracuda has built an impressive portfolio of solutions that are helping SMEs around the world protect their data and address critical security challenges,” said Bradley Brown, managing director at KKR, in a press statement. “We see a tremendous opportunity for long-term growth as these businesses continue to invest more in cybersecurity and we look forward to helping Barracuda scale and deliver next generation products that meet this growing need.”
The sale of Barracuda to KKR is the second headline-grabbing acquisition story of a still young week, along with Kaseya’s acquisition of Datto yesterday.
