CRN Exclusive: SonicWall Achieves Full Independence From Quest Following Strong Investor Interest


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SonicWall has completed the last piece of its separation from Quest, allowing the company to chart its own course from both an operational and financial standpoint.

The milestone for the Milpitas, Calif.-based security vendor comes 18 months after Francisco Partners completed its purchase of SonicWall and Quest from Dell, which both operated as part of the vendor's software group.

But the two companies never really fit together, with SonicWall focused on SMBs and selling exclusively through the channel while Quest supports different large enterprise buyers in more mature markets on a direct basis, according to Brian Decker, deal partner for Francisco Partners.

[RELATED: SonicWall Launches MSSP Program Focused On Enabling, Simplifying Security Operations]

"There wasn't any synergy from a selling and product perspective," Decker told CRN exclusively.

Although SonicWall and Quest had done sales, marketing, and product development separately since November 2016, the general and administrative functions such as IT, HR and finance needed more time to untangle, Decker said. SonicWall literally didn't have an HR or finance organization at the time of its split from Dell, said President and CEO Bill Conner, meaning the company had to build one from scratch.

SonicWall therefore had to work from two different systems around sales and service and use a separate ERP for processing credits, Conner said. As a result, Conner said every function in the business was somewhat handicapped or behind in what they needed to do.

SonicWall built out its own systems and facilities in a push to become completely independent from Quest from an operational standpoint, which was achieved in the second half 2017. The final piece, Conner said, was to separate the two businesses' debt structures into separate legal and operating entities to achieve complete financial independence, which just occurred recently.

In order to unwind its debt and completely disconnect from Quest, the company sought money from investors, which Conner said resulted in an outpouring of interest. Thanks to the oversubscription, Conner said SonicWall was able to get better terms and rates from the investment community.

"A lot of investors believe in our vision, strategy, and execution in this space," Conner told CRN. "There are a lot of people with real money who want to invest."

Now that SonicWall's P&L and balance sheet are fully independent of Quest, Conner said he will no longer have to spend time raising money and he – along with the company's financial and legal leadership – can devote their attention fully to ongoing business and growing the company's top and bottom line.

"I've got a clean balance sheet and position," Conner said.  

In the short-term, Decker said SonicWall had to divert a little attention away from product development in order to carry out the operational separation. But now that the work's done, Decker said SonicWall can focus completely on its vision around security rather than having to spend time on separation work.

"We've been incredibly impressed with how quickly and how significantly improved their business performance has been since we've owned them," Decker said.

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