Watchguard’s CEO, Ed Borey, has taken issue in a big way with our suggestion that his company was “sold to the lowest bidder”.
Last week, it emerged that Watchguard was being taken private after well-known investment outfit Francisco Partners bid $151 million in cash for a company that has been struggling with losses in recent quarters.
There had been talks with at least one other company, Vector Capital, about a higher offer, but Borey maintains adamantly that this was not a bid with any real flesh on it.
The Francisco offer was the only one of any note on the table, and so despite what Vector might claim in its chats to third-parties, Watchguard’s management had no option but to accept Francisco’s money.
This is all sub-plot. The much more intriguing issue is why a technology company would want to go private, having raised money through a public offering.
Borey attributes this to the strain of running a public company, and perhaps there is an unfashionable lesson here for startups looking to prime growth through share offerings - don’t.
“With a private company, there is the advantage of a longer horizon,” Borey said to Techworld, before going on to grizzle about the higher compliance costs that afflict public companies.
Where this leaves Watchguard’s is anyone’s guess. The company will continue to sell it products – which are decent – and from the point of view of customers and resellers, nothing much will change.
But it has new owners now, and they will want a pay-back at some point. Is this another route to being sold on? Time will tell, but it still sounds like the beginning of a change in direction of some sort.
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