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03 Aug 2006
WatchGuard’s chief executive has assured partners that it will be business as usual after the vendor entered a definitive agreement to be acquired by private equity firm Francisco Partners last week (CRN, 31 July).
The acquisition, for about $151m, is subject to regulatory and shareholder approval, which is expected to take about 90 days.
Speaking to CRN, WatchGuard’s chief executive Ed Borey said: “In terms of what this means for our channel partners, it is good news. The company will remain stand-alone but it will be private instead of public. Product development and direction will continue as it has for the past year or so.
“We will continue on the roadmap that we have shared with our channel partners and deliver the same high-quality products that we have always delivered.”
He added that the acquisition will allow WatchGuard to continue providing network security solutions to the SME market and build on its strong reputation in the Unified Threat Management (UTM) market.
“Francisco has other investments in the security space,” Borey said. “It is a focus area for the firm. It will give us access to a great number of experts, plus Francisco has the treasure chest to fund any good investment opportunities that may arise.”
He also played down industry speculation that Vector, another private equity firm, had made a higher offer than Francisco Partners to acquire the company.
“This was definitely not the case,” Borey said. “Vector never really got to the finish line.”
WatchGuard recently made changes to its channel strategy in the UK and announced its intentions to appoint another UK distributor (CRN, 8 May).
Ian Kilpatrick, managing director of existing WatchGuard distributor Wick Hill Group, welcomed the acquisition.
“I think it is good news for the channel,” Kilpatrick said. “It takes WatchGuard away from the quarterly reporting cycle. It has recently spent a lot of time and effort bringing out a new product, and has made some positive changes to its channel programme. Now it will be able to continue focusing on investing in taking products to market and leading the UTM race, rather than having to spend time on financial reporting every quarter.”
Clive Longbottom, service director at Quocirca, said: “Big players such as Symantec and Computer Associates are trying to be the one-stop-shop for security. Smaller vendors are looking to reach critical mass, or to at least get on the acquisition radar. The smallest firms tend to be the ones that have some good technology, but no marketing intelligence or budget.”
He added that WatchGuard has some reasonable technology, but suffered as a business from having little or no visibility in the market. This was because of its lack of marketing budget and messaging capability.
“Francisco Partners frees WatchGuard from the constraints of Wall Street, but it will still need to market itself better,” Longbottom said. “It needs to put other alliances and partnerships in place to reach beyond just having a core competency and to be seen as part of a holistic security solution.”
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