‘We believe Quest is well-positioned to capitalize on emerging growth trends in identity-centric cybersecurity, data intelligence and IT operations management software,’ that was announced by Clearlake’s Prashant Mehrotra and Paul Huber

After a half-decade of being owned by Francisco Partners, It is now reported that Clearlake Capital has agreed to purchase Quest Software for $5.4 billion including debt.

Aliso Viejo is based in California and it is a cybersecurity, data intelligence and IT operations management software provider that will continue to be led by Patrick Nichols, who has served as CEO since April 2020. The Wall Street Journal reported the $5.4 billion purchase price Sunday, even though the terms of the transaction were not disclosed. All of us remember that in 2016, Francisco Partners bought Quest and SonicWall from Dell Technologies for $2.4 billion.

In a statement, Nichols said:

“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 road maps, cloud/SaaS offerings and global presence. We will continue to expand our customer base as computing environments and related management, modernization and security challenges become more complex.”

It is expected that the transaction will be closed in the first quarter of 2022 and doesn’t include SonicWall, which is owned by private equity firm Francisco Partners and Elliott Management, which is an activist hedge fund. In June PE Hub reported that Francisco and Elliott Management were expected to launch a sale process for SonicWall later this month with assistance from Morgan Stanley.

Clearlake proposed that the acquisition of Quest would come less than two months after the purchase of OneLogin. Clearlake Partner Prashant Mehrotra and Principal Paul Huber commented:

“We believe Quest is well-positioned to capitalize on emerging growth trends in identity-centric cybersecurity, data intelligence and IT operations management software. Now with significant scale and complete independence, Quest is strategically differentiated in the market as a buy-and-build platform and industry consolidator.”

The co-founder and CEO Dipanjan Deb said that they are proud of the tremendous progress Quest has made since relaunching as an independent company. According to his words, they have had a long and successful track record executing divisional carve-out transactions and they are really grateful for having the opportunity to work with the Quest team in order to create value for the company, its customers and its partners.

Clearlake is planning to continue building Quest’s security and identity segment through further M&A, as it is now growing at double digits. The company sells its security technology to customers of all sizes, with One Identity traditionally focused on Fortune 5000 companies and OneLogin, historically strongest, in the commercial and midmarket areas.

As we know, in January 2021 Quest acquired data modelling, data governance and business process modelling software company, Erwin, from private equity firm Parallax Capital Partners. In the second half of 2020, Quest purchased Quadrotech and Binary Tree for expertise and software around Microsoft 365 and Office 365 cloud migrations.

Clearlake Co-Founder and Managing Partner Behdad Eghbali said in a statement that they are excited to partner with Patrick [Nichols, Quest’s CEO] and Carolyn McCarthy, Quest’s CFO … to help the company strengthen its strategic growth plans including best practices to accelerate cloud/SaaS adoption and support its buy-and-build strategy.

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