Before the new year, Veeam announced the promotion of Danny Allan to SVP and CTO. I posted an update saying it was the smartest and most strategic move Veeam has made in 12 months, and that includes the injection of $500M by Insight Ventures, the private equity firm that acquired them earlier this year. I also mentioned in that post to look for my blog after the new year. Now, all I'm hearing is the four-part harmonies of all Veeam voices singing from the same hymnal, "We Wanted To Be Acquired".

MY NOTES AFTER READING ABOUT DANNY'S PROMOTION

Page two of my notes went on to speculate about what is next for Veeam...those notes I won't share here but I will offer what I think is on the horizon for Veeam after I go through these acquisition notes I made.

WEAVING IT ALL TOGETHER

First, I thought it was odd that Insight injected $500M into Veeam but yet, there was no real buzz about an acquisition or hiring ramp from Veeam's end or anything that you would typically see from other similar companies in the same position.

Secondly, I always thought it was strange that they would take outside money since Veeam was in a very nice position without any outside money influencing the direction of the company. According to a CRN article from last year, after it was announced that Veeam had entered into the largest round of funding yet led by Insight Ventures, the company had only one round prior to that, $32M, comprised of funds by the two founders and about $15M from Insight. While the title of the article says the funding was set up for future acquisition and R&D, we didn't see any acquisition or even an inkling by Veeam. It goes on to say that the company already had $800M in cash, clearly plenty of loot to make some strategic acquisitions I would think, but then it took in the $500M to make a cool $1.3B available, but still no movement.

As I look at my notes I can see where I was flawed a bit. If they were to be acquired by someone else, one has to take into consideration the multiplier, plus the cash on hand, plus whatever the paper says that Insight led for that massive round of funding (they need to get their bit out of the deal too). Let's say that would have really put them at a near $10b target. Too rich for many, but a very small few and to pull the trigger that quickly would be challenging at best. If I would have thought about that in December, it would have made more sense that Insight would be the acquiring entity.

Of course, they would, if my math is accurate, this makes their investment quite nice and ripe for immediate gain to the right buyer, should one come along down the road.

OBSERVATIONS

Let's be clear, I know of a few companies who really wanted (read: NEEDED) to be acquired, and none of them, ZERO, had the cash that Veeam has in the bank.

Now, that gets me to my next observation. I, like you, have read all of the blogs, articles, tweets, etc. about why Veeam wanted to be acquired (singing from the same hymnal as I mentioned at the outset of this blog). Let's be clear, I know of a few companies who really wanted (read: NEEDED) to be acquired, and none of them, ZERO, had the cash that Veeam has in the bank. However, all of the messaging is very consistent, as it should be. Whether you see this as a good thing or a bad thing, consistency across the board from the company executives is very important.

In a recent TechCrunch article the writer states that Insight Ventures loved the company so much that they bought it, I'm paraphrasing, but that was the gist of the statement that you can read here. And clearly, as you all have read, both of the founders are stepping aside...but not stepping out. According to the CRN article, they both will remain for a period of time during the transition. That's good for the company and important as these two really have been the cornerstone of the company from the beginning.

Did Veeam really NEED to be acquired or WANT to be acquired?

I don't think that really matters, it is what is being put forward as a strategic plan and if it really was/is the plan then kudos to them and if it wasn't, do you really care?

You shouldn't care, but apparently Veeam believes that it is a big enough elephant in the room that it has decided to create a messaging map around it and create narratives extolling the virtues of this acquisition.

What you should care about is what the company will look like in the next 12 months. There's a lot of moving and shaking going on right now and when we look back at some companies acquired by PEs we don't typically see a strong success record, there is a handful and perhaps there should be a study done on how to do this right. However, Insight did acquire a company that was making money, right? This is what I'll be looking for over the next 6-12 months, as I'm sure the PE firm will as well, how it continues to produce cash, expand into adjacent markets, and attempt to grow share in the U.S. against a very healthy group of competitors.

NEXT STEPS?

What is really important is what direction Veeam will take now that it is on this new trajectory. Well, as long as the PE firm will allow the company to operate without too much oversight on their part, I think what we can look for from Veeam is much more around security. While they already had some of that in 9.5U4, it really isn't what I would call a true security feature. However, with Danny Allan's background in security, I think we should be looking for the company to acquire a substantial platform that will be integrated into their own Intelligent Data Management Platform and not just integrated from a marketing perspective. And I think it has to happen this year for a number of reasons.

We've been waiting to see movement on that initial $500M - but nothing significant as far as I can tell.

This acquisition was huge and if it really was planned and strategic then there should already be something in play that we should see in the next two quarters. Unless they spent a ton of money since the last article, they should have over $1b in cash on hand. That should get something moving.

Third, and probably the most significant is the bread crumb trail of tweets and such that I have been reading by Danny Allan and other Veeamers over the second half of 2019.

I have a few ideas of whom they should acquire, but that's something I'll keep to myself for now. There are a host of other things I think Veeam needs in the product to really take over the enterprise space they desire as well, but I'll keep those things to myself as well.

Who knows, I could be completely wrong, but I have a pretty good track record of calling it over the past 30 some years in this business. Let's see if I'm right. In hindsight, I should have posted my blog about the acquisition in December...oh well...

Chapa, signing off



