Investment Firm Clearlake Capital to Acquire Quest Software

Quest Software, Inc. signed a definitive agreement with Clearlake Capital Group, L.P. (together with certain of its affiliates) to acquire the company from Francisco Partners.

Patrick Nichols, current CEO of Quest, will continue to lead the company supported by the existing executive management team.

Upon closing of the transaction, Clearlake will become the majority shareholder in Quest.

The terms of the transaction were not disclosed.
 
“We have long admired Quest as a leading identity-centric cybersecurity, data intelligence, and IT operations management software platform and the company’s software solutions that help secure enterprise IT environments,” said Behdad Eghbali, co-founder and managing partner, Clearlake. “We are excited to partner with Patrick and Carolyn McCarthy, Quest’s CFO, to utilize Clearlake’s O.P.S. framework to help the company strengthen its strategic growth plans including best practices to accelerate cloud/SaaS adoption and support its buy-and-build strategy.“
 
“IT teams worldwide rely on Quest to help them solve critical challenges that enable business growth and address crucial strategic initiatives. Quest has evolved to become a market leader in identity-centric cybersecurity, data intelligence, and  IT operations management and I want to thank Francisco Partners for helping Quest realize this vision,” said Nichols. “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 roadmaps, 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.”
 
“We are proud of the tremendous progress Quest has made since re-launching as an independent company, and I want to recognize Patrick Nichols and the management team for strong execution,” said Dipanjan “DJ” Deb, co-founder and CEO, Francisco Partners. “We have a long and successful track record executing divisional carve-out transactions and are grateful to have had the opportunity to work with the Quest team to create value for the company, its customers, and its partners. We wish the Quest organization well in their new partnership with Clearlake.”
 
Founded in 1987, Quest has built a reputation over 3 decades as a critical software solution provider for security-sensitive customers with innovation addressing rapidly evolving risks and security threats. It enables today’s edgeless IT ecosystem – across people, applications, and data to endpoints – allowing customers to maintain controls, mitigate and contain security threats proactively, and maintain operational up-time while decreasing costs.
 
Its business segments include:
• One Identity and OneLogin, making te firm the only identity-centric cybersecurity software vendor providing industry-recognized leading solutions across all aspects of a unified identity security and management approach crucial to taming identity sprawl and addressing identity-based attacks.
• Platform Management for Microsoft, which provides software for IT operations resilience and flexibility while enabling organizations to stay in control by securing and managing Active Directory.
• Information Management and erwin by Quest, provider of data operations and intelligence software solutions that modernize infrastructure, optimize performance and deliver applications faster, with offerings including Toad for Oracle, erwin Data Modeler, erwin Data Intelligence, Foglight, ApexSQL and SharePlex.
• Data protection and endpoint management software solutions to control data growth and optimize system availability with NetVault, QoreStore, and Kace offerings.
 
“It has been a pleasure partnering with Patrick and the entire management team at Quest in scaling the business both organically and through strategic acquisitions,” said Brian Decker, partner and Christine Wang, principal, Francisco Partners. “Since our partnership with the company, Quest has evolved to become an innovative leader in the cybersecurity, data intelligence and IT operations management markets delivering significant value to its customers and partners.”
 
“With a robust portfolio of market-leading software and SaaS solutions alongside a rich history of product innovation, we believe Quest is well positioned to capitalize on emerging growth trends in identity-centric cybersecurity, data intelligence and IT operations management software markets,” said Prashant Mehrotra, partner, and Paul Huber, principal, Clearlake. “Now with significant scale and completely independent, Quest is strategically differentiated in the market as a buy-and-build platform and industry consolidator, and we’re thrilled to partner with Patrick, Carolyn and the management team to help Quest accelerate growth organically and through M&A.”
 
The transaction is expected to close in 1Q22, pending customary regulatory approvals and closing conditions.

For Quest, Goldman Sachs acted as sole lead financial advisor and J.P. Morgan also acted as financial advisor and Paul Hastings LLP acted as legal advisor.
 
Silicon Valley Tech Investment Bank and Morgan Stanley along with BoA Securities, Barclays, Evercore, and William Blair acted as financial advisors to Clearlake, and Sidley Austin LLP acted as legal advisor.
 
Goldman Sachs, Morgan Stanley, BoA Securities, Barclays, Credit Suisse, BMO Capital Markets and Citigroup, Inc. provided committed debt financing for the transaction.