Quest Software flipped from one private equity owner to another

Private equity-owned Quest Software, which supplies data management and protection software, has been bought by Clearlake Capital for an undisclosed amount, reported to be $5.4 billion.

Quest was started up in 1987 and grew to the point where, with 100,000 customers, it was bought by Dell, who combined it with information security business SonicWall. Dell, needing money to help it buy EMC, sold it all off to private equity business Francisco Partners and Elliott Management in mid-2016 in a deal thought to be worth $2 billion.

Buyer Behdad Eghbali, Co-founder and managing partner at Clearlake, issued an acquisition quote, saying: “We have long admired Quest as a leading identity-centric cybersecurity, data intelligence, and IT operations management software platform and the Company’s software solutions that help secure enterprise IT environments.”

Seller Dipanjan “DJ” Deb, Co-founder and CEO of Francisco Partners, said: “We are proud of the tremendous progress Quest has made since re-launching as an independent company, and I want to recognize Patrick Nichols and the management team for strong execution. We have a long and successful track record executing divisional carve-out transactions and are grateful to have had the opportunity to work with the Quest team to create value for the company, its customers, and its partners. We wish the Quest organization well in its new partnership with Clearlake.”

Quest CEO Patrick Nicholls, who was appointed in May 2020 and stays on as CEO, said: “Quest has evolved to become a market leader in identity-centric cybersecurity, data intelligence, and IT operations management and I want to thank Francisco Partners for helping Quest realise this vision. Our new partnership with Clearlake will accelerate Quest’s momentum as a leader and innovator as we increase our investment pace in our core product roadmaps, cloud/SaaS offerings, and global presence.”

More to the point Prashant Mehrotra, partner, and Paul Huber, principal at Clearlake, said: “Now with significant scale and completely independent, Quest is strategically differentiated in the market as a buy-and-build platform and industry consolidator, and we’re thrilled to partner with Patrick, Carolyn and the management team to help Quest accelerate growth organically and through M&A.”

There’s going to be acquisitions with Clearlake providing cash. Francisco Partners has, in effect, sold at a profit — the Wall Street Journal reports the sales was for $5.4 billion, including debt. Francisco Partners will now let Clearview take Quest and run with it while it presumably looks for another “divisional carve-out transaction.” 

Some Quest history

The SonicWall information security part of this Dell division was spun out in November that year by Francisco Partners and Quest then underwent layoffs and a reorganisation.

Since then Francisco Partners helped grow the Quest business, acquiring Balabit Corp for the one Identity unit in 2018, Binary Tree in September last year and erwin in January this year. Quest has four operating segments:

  • One Identity and OneLogin identity-centric cybersecurity software covering all aspects of a unified identity security and management approach to combat identity sprawl and identity-based attacks.
  • Platform Management for Microsoft offering IT operations resilience and flexibility, securing and managing Active Directory.
  • Information Management and erwin by Quest; data operations and intelligence software to optimise performance and deliver apps faster, with offerings including Toad for Oracle, erwin Data Modeler, erwin Data Intelligence, Foglight, ApexSQL and SharePlex.
  • Data protection and endpoint management software to control data growth and optimise system availability with NetVault, QoreStore, and Kace offerings.

The current team of exec managers at Quest stays in place and the deal should close in early 2022.