SonicWALL’s big-ticket buyout

Contact: Brenon Daly

The recently closed leveraged buyout (LBO) of SonicWALL represents the largest straight take-private of a technology company so far this year. Thoma Bravo announced the deal, which has an equity value of $717m, back in early June and shareholders gave the LBO their blessing on Friday. The bid of $11.50 for each share stood as the highest price for SonicWALL shares since 2002. The close came only after an unidentified bidder – which some observers suspect may have been the ever-aggressive Barracuda Networks – stepped out of the process.

While other private equity (PE) shops have handed over bigger checks so far this year than the one Thoma Bravo is writing for SonicWALL, the buyout of the unified threat management vendor is the most money that a single firm has spent to take a public company off the market in 2010. Other large deals have involved either carve-outs (IDC, for instance, was majority owned by Pearson), secondary transactions (Hellman & Friedman’s flip of Vertafore to TPG Capital) or club deals (the consortium buyout of SkillSoft, as well as IDC).

The big-ticket buyouts of SonicWALL and other companies have helped push PE activity so far this year to essentially where it was in 2008. PE spending in the first two quarters of 2010 hit $14bn, just a shade under the $16bn we tallied in 2008 but a dramatic rebound over the paltry $2bn we saw in the first half of last year. The seven-fold increase in spending by buyout shops so far in 2010 has vastly outpaced the broad M&A market, which is basically running at twice the spending of the same time in recession-wracked 2009. See our full report on first-half tech M&A activity.