Bain Capital Eliminated As ConnectWise Moves To Next Phase Of Buyout Process: Sources

Bain Capital’s offer came in below the price Thoma Bravo is demanding for the managed services platform company, a source says.

Bain Capital has been knocked out of the bidding for ConnectWise, failing to make the cut as the managed services platform company moves to the next phase of the process to select a private equity buyer, sources told CRN.

“Bain [Capital] was considered a front-runner, but they were not selected to go forward,” said a source close to the bidding process. “Everyone in that very, very tight circle of people that know what is going on was stunned that Bain was not selected to go forward. That was really shocking to a lot of people involved because Bain had the most buzz.”

One source said Bain did not meet the minimum asking price during what was described as an invitation-only auction orchestrated by ConnectWise’s private equity owner, Thoma Bravo. Sources told CRN that ConnectWise is being valued at $6 billion to $8 billion.

“They weren’t getting the price they want [from Bain],” a source said. “That’s why Bain was eliminated. The people I talked to thought Bain was going to win the bidding. They thought it was almost a sure thing. Now its anyone’s guess what is going to happen.”

CRN has reached out to ConnectWise and Bain Capital for comment. Neither responded as of press time.

[RELATED: ConnectWise Mulls Sale To Private Equity: Sources]

The sources could not say how many other offers are being considered.

“They have only invited big PE firms that could afford to pay the big number,” said one source. “We don’t know how many PE companies are bidding.”

If it doesn’t get the cash it wants from bidders, Thoma Bravo—which holds six of the eight seats on the ConnectWise board of directors—could hold on to ConnectWise without a sale or move it to another in-house fund, a source said.

Two sources said Thoma Bravo late last year had planned to do the latter, shifting ownership between funds to create a cash-out event for investors. Instead, Thoma Bravo now hopes to see what price it can command through the bidding process, which could potentially bring a higher value for shareholders.

Thoma Bravo acquired ConnectWise in February 2019. At the time, Thoma Bravo also owned ConnectWise competitor Continuum, which was folded into ConnectWise in October 2019. The price tag of the ConnectWise sale was not publicly disclosed but was said to be near $2 billion.

One source said the next round of the selection process involves detailed due diligence by prospective buyers, who will assemble data rooms to evaluate and analyze ConnectWise financial and MSP customer data.

The source said ConnectWise is benefiting in the bidding process from the bright prospects for growth in the MSP market, especially in the SMB and midmarket.

“It’s a very sticky business model,” said the source. “Once a small-medium business has an MSP, they usually don’t get rid of that MSP. ConnectWise is being viewed as a tremendous asset to be owned by another private equity company.”

CJ Fairfield contributed to this report.