Private equity firms can offer enterprise startups a viable exit option – ProWellTech
Four years ago, Ping Identity was at a crossroads. A venerable player in the single sign-on market, his product was not a market leader and after 14 years and $ 128 million in venture capital, he needed to find a new path.
While the company had once discussed an IPO, in 2016 it began providing antennas for buyers. Vista Equity Partners made a $ 600 million offer and promised to continue building the company, which the corporate buyers would not have guaranteed. Ping CEO and co-founder Andre Durand accepted Vista’s offer, seeing it as a way to pay off its investors and employees and get out the right way. Even better, his company was not included in a large entity as it probably would have with a typical M&A transaction.
As it turned out, the question about the IPO or the acquisition was not a proposal or a proposal. Vista continued to invest in the company, using small acquisitions like UnboundID and Elastic Beam to complement its roadmap, and Ping went public last year. The company’s experience shows that private equity offers a reasonable way for mature business start-ups with decent but not exceptional growth – such as 100% or more of the venture capital firms they tend to favor – to exit, pay investors, reward employees and keep building the company.
But not everyone who follows this path has an orderly result like Ping’s. Some companies are introduced to the P / E universe where they replace the executive team, endure large layoffs or sell profitable parts and stop investing in the product. But the three private equity firms we spoke to: Vista Equity, Thoma Bravo and Scaleworks: Everyone wanted their acquisitions to succeed, even if each of them does it differently.