Partners: Riverbed IPO Doesn't Make Sense

Riverbed Technology partners aren't exactly jumping for joy over the possibility that the company will go public again only a year after it became a private company.

"The difference between private and public with channel partners is they lose some flexibility once they're public to cut the right kind of deals," said Pat Grillo, president and CEO of Atrion Communications, a Branchburg, N.J.-based solution provider and a top Riverbed partner. "[Riverbed] could lose some flexibility because everyone's watching and the rules and regulations are enforced a lot more on a public company than (on) a private company … ’[Companies] also look more closely at some of the profit margins [their partners] make when they’re public versus private.’

The Register first reported that Riverbed was gearing up for its second IPO. Riverbed did not respond for comment by press time.

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In December 2014, then a publicly traded company for eight years, Riverbed announced it would be acquired for $3.6 billion in cash by a group led by private equity firms Thoma Bravo and Teachers' Private Capital. The goal was to allow Riverbed to break away from a slowdown in growth at the time to allow the application performance vendor to reach the "next level of growth," Riverbed said at the time.

One top executive from a solution provider that partners with Riverbed said it's too soon for the vendor to go back to being a public company.

"I don't think there's anything different [in what they're selling] from the time they went private," said the executive, who declined to be named. "We expected more of a three- to four-year run where they would try to invest and get their revenue up more … There's not a whole lot of difference from what they were before Thoma Bravo until now."

Grillo, meanwhile, said a company also loses "a little competitiveness" once you go public.

"Companies tend to get a little more tight on stuff when they're public – more people looking for a return on their investments, more people watching the hen house," he said.

Partners also say there are several upsides of Riverbed going public, namely that it brings in funding to allow more research and development (R&D).

"But supposedly, the guys that own them were already funneling a lot of money into them," the executive said.

Since San Francisco-based Riverbed has been private, it acquired software-defined networking (SDN) specialist Ocedo with hopes of driving net new services for channel partners.

In April, Riverbed used Ocedo's SD-WAN technology to launch the company's SteelConnect product suite, aimed at enabling businesses to orchestrate application delivery across hybrid WANs, remote LANs and cloud networks such as Microsoft Azure and Amazon Web Services.

Partners say that although they would have preferred Riverbed to stay private another year or two, going public isn't going to make them run for the hills.

"It does seem kind of short term, really … but there could be a tradeoff there," said Grillo.

At Riverbed's second annual Partner Summit 2016 last month, the application performance specialist unveiled a new Solution & Services Program, five additional rebate points in its Partner Program and a new track tailored for managed service providers.