On Monday, Switzerland-based software licensing behemoth SoftwareONE announced plans to IPO on the SIX Swiss Exchange in Zurich.
Slated for Q4 this year, SoftwareONE described the move as a "natural next step" for the company, which will boost its visibility and global profile.
The public offering comes less than a year after the Microsoft partner entered into a mega merger with German competitor Comparex to create a single entity that manages €10bn in customer software assets, with 5,300 staff globally.
Channel Partner Insight picks out four key takeaways from SoftwareONE's next big move.
IPO will be a 'resource-consuming' process
A SoftwareONE spokesperson told CPI on Monday that the planned IPO "does not have an impact on the business whatsoever", and the firm will continue to support its 65,000 customers globally.
But there's no doubt that planning for an IPO is a hugely time-consuming and drawn-out process, requiring hundreds of meetings with existing shareholders and investors as well as a huge amount of legal and financial planning.
Rune Syversen, CEO of one of SoftwareONE's closest competitors, Crayon, said that the Switzerland-based firm's IPO will be a lengthy process that could drain its resources, and have short-term consequences on its financials for its first quarter as a public company.
The Crayon CEO speaks from experience. He took his €909m-revenue software firm public at the end of 2017, but suffered a "disappointing" first quarter after the IPO. He admitted that the time-intensive process detracted from Crayon's day-to-day operations and resulted in a short-term financial hit.
Syversen, along with co-CEO Torgrim Takle, even used his own money to buy up more shares in Crayon after a tough few opening weeks after the IPO.
"It is exhausting. I remember from when we listed, we were a fairly smaller entity at the time, but you have to do roadshows across the globe. Around 150 to 250 investor meetings I would assume, and huge preparations with the bankers to build the prospectus," he said.
"It is very resource consuming. There are lawyers and bankers all queuing up to get a share of the pie. It sucks a bit of the juice out of the day-to-day operations. We delivered a disappointing quarter after the listing, much related to the fact that you lose your eye on the ball for a short time at least.
"I think for [SoftwareONE] it will be even more resource consuming than it was for us."
Crayon has gone on to thrive on the stock exchange, with its share price increasing 157 per cent since it listed in November 2017.
SoftwareONE's listing will lift the boats of other software partners
When the largest player in any market steps out of private ownership and files for an IPO, it adds credibility to the rest of its competitors and suggests that the space is entering a new phase of maturity.
Owner and founder of The ITAM Review, Martin Thompson, said SoftwareONE's IPO demonstrates the growing maturity and significance of the ITAM market.
"I think it adds more credibility to the company as any publicly listed company faces more scrutiny," he said.
Syversen added that he expects Crayon's share price to be positively affected by SoftwareONE's plans to float on the stock exchange.
The IPO will also give a much better benchmark and point of comparison for SoftwareONE's competitors and the wider IT industry.
"It gives us a peer group to compare with from a pricing perspective. I think the market has had issues in finding comparable businesses from a pricing perspective. I think that will help," he said.
"It is a good thing for us, showing that the consolidation in the market has really started. We see SoftwareONE now as one of the true global players, including ourselves."
'Less pressure' in a European rather than US IPO
Stuart Fenton, CEO of Microsoft partner QuantiQ, said that SoftwareONE will have to deal with new legal and regulatory pressures as a public company, presenting a "very different world" for its management team.
He added that listing in Europe rather than the US will make it easier for it to adapt to the change.
"This is an inevitable action given the size of the organisation now. KKR invested heavily, and certainly had a public offering in mind. SoftwareOne is truly a powerhouse and has overtaken many larger businesses in their areas of expertise," he said.
"This will be a very different world for this team and it will be fascinating to see how they adapt to those pressures."
Proof that the market is consolidating
If its acquisition of Comparex isn't enough proof that scale and size are becoming more important to the survival of the channel's software licensing giants, then SoftwareONE's IPO surely resonates with a prophesied consolidation wave in the space.
Software licensing resellers, including Atea, Insight and Crayon, will tell you that Microsoft is investing in the 10 largest players in the industry, putting the survival of smaller partners at risk.
According to Syversen, SoftwareONE's IPO confirms his belief that the software space is undergoing huge change.
"I think you see that the big guys are getting bigger and consolidating while the smaller ones are declining. We even see that some of them are losing their transactional capabilities or authorisation of the vendors. There is a globalisation trend also from customers, with the hyperscalers coming in and competing with the local MSPs particularly. You will see many of the local players in the smaller markets be consolidated by players like SoftwareONE," he said.
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