Thoma Bravo doubles down on Double-Take

Contact: Brenon Daly

Just a week after we noted that the bidding for Double-Take Software had hit the final stretch, with a trio of buyout shops still in the running, one of the private equity firms announced plans Monday to pick up the file-replication software vendor. Thoma Bravo, through its Vision Solutions portfolio company, will pay $242m for Double-Take in a take-private that’s expected to close in the third quarter. Assuming it goes through, the deal will end Double-Take’s three and a half years as a public company.

Frankly, Double-Take’s run as a public company was one that we didn’t really understand. It never cracked $100m in sales, and has basically been trapped at the same revenue level it hit in 2007. In that year, the vendor recorded sales of $83m. Although sales jumped 16% to $96m in 2008, they ticked back down to $83m in 2009 and Double-Take recently guided to expect about $86m in revenue this year. And the small company was competing against the replication offerings from some of the largest storage providers on the planet: EMC with RepliStor, Symantec with Replication Exec and the replication products CA Inc obtained in its XOsoft purchase.

Perhaps it’s not surprising, then, that the $10.50-per-share bid is actually slightly below the price Double-Take fetched when it came public. In its December 2006 IPO, Double-Take priced its shares at $11 each. And although the stock did trade at twice that price in late 2007, it has been below the IPO price since September 2008. In its time as a public company, Double-Take basically matched the performance of the Nasdaq.

At an equity value of $242m, the actual cost of Double-Take is much lower. The profitable, debt-free vendor held $89m in its treasury at the end of the first quarter, meaning Thoma Bravo/Vision Solutions will only have to hand over $153m in cash. That’s just 1.8 times this year’s projected revenue, and about 4 times maintenance revenue.