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SolarWinds Looks To Spin Off MSP Business

‘We think that market has been growing quickly, but there is another growth wave coming,’ SolarWinds CEO Kevin Thompson tells CRN.

SolarWinds wants to spin off its ITSM business SolarWinds MSP into a separate, publicly traded company with the belief that doing so will keep spending in line with business objectives of each company, CEO Kevin Thompson told investors.

“We do believe that we are at an inflection point in the MSP market,” Solarwinds CEO Kevin Thompson told CRN moments after the earnings call where he announced the plan. “We think that market has been growing quickly, but there is another growth wave coming as MSPs expand the number of things they’re doing for small business customers. I do believe that the 30 or 40 percent of the market that has not been using MSPs are going to move to MSPs quickly, given this environment we’ve found ourselves in, and they found out how exposed they are trying to run their own environment.”

SolarWinds would retain its Core IT Management business focused primarily on corporate IT and enterprise organizations. SolarWinds said in a statement that if completed, the potential spin-off would enable shareholders to more clearly evaluate the performance and potential of each entity on a standalone basis, while allowing each to pursue its own distinct business strategy and capital allocation policy.

Thompson said the process to spin off the MSP business will “take a while.”

“We’re early in the exploration process today,” he said. “There is a lot of work to do operationally to figure out how you would do this. Luckily these businesses run as business units today, so there’s a lot of separate systems and separate technologies.”

SolarWinds said if a spin-off is completed shareholders would have stock in both companies. Private equity firm Thoma Bravo has an ownership stake in both SolarWinds and its SolarWinds MSP competitor ConnectWise. Private equity firm Silverlake is also an investor in SolarWinds.

Longtime SolarWinds MSP customer Rich Delaney, chief technology officer at Delaney Computer Services in New York and New Jersey, said he is interested in seeing the company provide better prices and better support for MSPs in its ecosystem.

“If this results in better pricing and better products and better support, then I’m all for it,” he said. “These are tough times for MSPs. I’m honestly not interested in how they go about making more money. I am interested in getting a better value for my business.”

Thompson said he understood the MSP’s priorities and said this change, if it happens, would only help SolarWinds MSP deliver for its customers.

“It’s easier if you get up everyday and that team just worry about the MSP market. They don’t have to worry about working with me to prioritize the allocation of resources,” he said. “That’s absolutely part of the strategy is to provide better technology, have a better relationship that we’re managing more effectively. I think we’re doing a good job today, but I think we can go from good to great.”

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