Alfresco Software, Inc. announced today that it is being acquired by private equity firm Thomas H. Lee Partners (“THL”).
Alfresco had been rumored to be on the block for quite some time. There was speculation that cash was dwindling, but I have no way to confirm that was the case.
To be sure, Alfresco has a vision for the future that is going to require resources, and making yourself available to be purchased is one way to get resources. A private equity acquisition couldn’t have been their first choice, but there just didn’t seem to be any other companies out there for whom acquiring Alfresco made any kind of sense.
How Will This Affect You?
Private equity firms are investors–they buy companies with the express intent of selling that company in the future to make a profit. This is very different than if Alfresco had been acquired by a larger tech company or a competitor in the ECM space or if had raised funds through an IPO.
If you are a customer and you are aligned with Alfresco’s future vision of content services running in the cloud, decomposed into a set of independent services, then you should be hopeful that THL also believed in that vision, and that this acquisition will make it more likely to materialize. Day-to-day, I suspect nothing much will change for customers in the short-term.
If you run Community Edition, or your content management needs are not quite as visionary, cross your fingers and hope that the new investors don’t completely ignore the the parts of the business that don’t have a direct and immediate impact on their return on investment.
Private equity firms don’t buy and hold. The clock is now ticking on THL’s investment. Look for a renewed emphasis on anything and everything that can pump up Alfresco’s attractiveness to future suitors or public investors.
Related to the “speculation that cash was dwindling” comment, as a member of the executive staff, I can say with the utmost confidence that this is untrue. It is common for us to share our cash position in our internal (confidential) company all hands meetings, so I am confident many would agree with me.
Excellent, Thomas, thanks for clearing that up!
Echoing Thomas’s comments, we were adding cash. Best deals ever in last couple of quarters. Jeff, you can always ask if you don’t know. I didn’t hold back anything in Lisbon.
That’s good news, John, thanks for the comment. I definitely appreciate your openness to share what you can. Your personal availability to the community over the years has been stellar.
I agree that you shared a lot about the company vision and direction in Lisbon, but I didn’t see any information about your cash position in any of the talks I attended, nor would I expect to. What I was pointing out in the post is simply that there was speculation, as there always will be, and one of the ideas floated was that cash might be a problem. You and Thomas have definitely made the point that cash wasn’t an issue.
From past experience in the ECM space I am glad it is not another ECM company buying out Alfresco because it would have been the end.
I also hope new roll-out/license models would emerge as the previous model virtually killed Alfresco in the South African market.