Alfresco Acquired by a Private Equity Firm THL
Alfresco, an enterprise open-source software company, has entered into an agreement to be acquired by funds affiliated with Thomas H. Lee Partners, L.P., a private equity firm. Headquartered in Maidenhead, U.K., and San Mateo, California, U.S., Alfresco offers services for content, processes, governance, integration, and extension under its product called “Digital Business Platform,” which powers the work of over 11 million people at industry-leading organizations in 195 countries worldwide. No financial terms were disclosed. The deal is expected to close in the first quarter of this year.
“We are thrilled about the opportunity to partner with THL – a firm with an impressive track record of growing successful technology and information services businesses,” said Doug Dennerline, Alfresco’s Chief Executive Officer. “With THL’s deep industry experience, operational expertise, and strategic guidance, we will be well positioned to expand our platform, build on our space in the enterprise content management and business process automation markets, and continue providing customers with the best-in-class service they have come to know and expect.”
Doug Dennerline also made a pledge that the acquisition wouldn’t change Alfresco’s focus on disruption in the ECM and BPM markets with open, modern, cloud-ready technology. “Going forward, Alfresco will continue to be the same company that you have come to rely on,” he added. He also reassured that they would continue to roll out the upcoming releases across the Alfresco Digital Business Platform in the Spring and beyond as planned.
Hot on the heels of the acquisition, I reached out to Alfresco’s CMO Sydney Sloan to ask what this deal means to the Alfresco ecosystem:
What Will THL Bring to Alfresco?
Sloan: "THL has an impressive track record of growing successful technology and information services businesses. The focus is on our continued growth. We will take advantage of their deep industry experience and operational expertise, and with their support, we will continue to deliver innovation on the Alfresco Digital Business Platform and help customers succeed. We are thrilled to partner with THL."
What Does This Acquisition Mean to Alfresco’s Customers?
Sloan: "Our commitment to our customers does not change! We are working hard to deliver on our product roadmap and will continue providing our customers with the award-winning service they have come to know and expect. Our focus on powering digital transformation in the ECM and BPM markets with open, modern, cloud-native technology will not change. THL is excited about the growth in these markets and Alfresco’s leadership position. This is an exciting time for Alfresco and our customers."
Knowing that Alfresco has recently been focusing on platform expansion, optimization, scalability, and extensibility, how will this acquisition impact Alfresco’s innovation path?
Sloan: Laura Grattan, Managing Director at THL, said it perfectly, “Alfresco is an innovative leader in content management and process automation solutions, operating in a large, underserved market. Their modern, cloud-native platform is the preferred technology for companies that are carrying out successful digital transformations, making this a highly attractive investment opportunity for THL. Alfresco has an outstanding reputation for enabling customers to collaborate more effectively, optimize business processes, and strengthen compliance, and we look forward to working closely with their talented team to help the company execute its go-forward strategy and accelerate growth.”
Boston, Massachusetts-based THL’s investments focus mostly on growth-oriented companies within three broad sectors: Business & Financial Services, Consumer & Healthcare, and Media & Information Services. The private equity has sponsored very large transactions so far; Dunkin' Brands, Fidelity National Information Services, HomeSide Lending, Houghton Mifflin, inVentiv Health, Michael Foods, The Nielsen Company, ProSiebenSat.1, Snapple, Warner Chilcott, Warner Music Group, and West Corporation, to name a few. THL has raised over $22 billion of equity capital, acquired over 140 portfolio companies and completed over 360 add-on acquisitions which collectively represent a combined enterprise value at the time of acquisition of over $200 billion.
To take an in-depth look at the deal between Alfresco and THL, I also reached out to Alan Pelz-Sharpe, founder and principal analyst at Deep Analysis. “Alfresco being bought by a private equity was no surprise, they are an ideal fit for a PE firm. It makes sense as an IPO is not really an option and this way it stays under a single owner and has access to the funds it needs to grow to the next level. I would expect Alfresco to build up its marketing and sales, move forward more quickly on its AWS path and potentially make tuck-in acquisitions over the coming year or so. All things it could have done previously, but at a much faster pace now,” Pelz-Sharpe commented on the announcement.
When it comes to the impact of the acquisition on the ECM market, he said: “In terms of the broader ECM & BPM landscape it doesn’t fundamentally change anything but it lifts a question mark that Alfresco had over its head regarding its long-term future. Depending on how they execute on the opportunity they could see significant growth particularly for mid to larger sized firms that have committed to AWS and are in the process of transforming their platforms.”
Open Source Has Become Sexy Again
We have recently celebrated the 20th anniversary of open source. Being an enterprise open-source provider of process automation, content management, and information governance software, Alfresco has long been cultivating its open source community very delicately.
In my previous conversation with Chris Wiborg, Vice President of Product Marketing at Alfresco, he had said: “It’s been interesting to see how important open (open APIs, open standard, open source) has become in this new era. For customers that want to move quickly, it’s clear that proprietary systems of old don’t provide the flexibility and interoperability required to be able to rapidly create – as well as rapidly adapt – solutions being designed to keep up with the pace of change. Open source has become sexy all over again!”
His point has also been backed by a survey conducted with 328 senior-level executives, representing a range of job functions and industries, as the study provides a breakdown of the tools, processes, and resources that organizations take advantage of to innovate. 90% of Best-in-Class organizations consider open-source technologies as the best way to keep the movement of ideas inside and outside of their organizations.
Apparently, THL plans to further invest in the ECM platform as well as the Alfresco open source ecosystem. Based on our previous conversations with Alfresco’s leadership team, the vendor has been amplifying its platform to keep up with their tech-savvy user base’s needs. Today’s modern customers want to explore the ways of integrating content services and process services into different experiences and more bespoke solutions that people are building.
With this demand in mind, Alfresco has been heavily investing in innovation to differentiate themselves from the ECM crowd. A case in point, becoming the first content services provider on Amazon to be able to launch an Alfresco instance with an Amazon Web Services Quick Start button. Alfresco Quick Start users can build a full production environment and it takes roughly only 42 minutes because the platform rapidly shrinks the time and effort of deploying Alfresco down from days to a matter of minutes. The solution seems to be well received in the market as Alfresco had a 150,000-seat deployment up and running in six weeks thanks to Alfresco Quick Start. With the acquisition, as its CMO and CEO also indicated, Alfresco will keep innovating to grow. If the leadership lives up to this promise especially in its AWS path, as Pelz-Sharpe expects from the vendor, the deal will certainly bring not only more accounts to Alfresco but also more innovations to the ECM space.