Thoma Bravo sells next-gen firewall, UTM vendor SonicWall to Dell

Private equity firm Thoma Bravo is selling its investment in SonicWall to Dell in a deal that will expand the pc maker's security industry presence with the addition of a next-generation firewall business.

Dell is making an attempt to expand their breadth with enterprise customers and they are reasonably seeing that they have gaps in their product line and are looking to fill them.

Mike Rothman, analyst, president, Securosis

Financial terms of the deal were not released.

In addition to next-generation firewalls, San Jose, Calif.-based SonicWall sells unified threat management (UTM) appliances. Thoma Bravo acquired SonicWall for $717 million, taking the security vendor private at a time when it was struggling with its stock price despite making headway with enterprise deployments of its next-generation firewall, said Mike Rothman, analyst and president of security research firm Securosis. Thoma Bravo likely helped the appliance maker reorganize its finances, giving it a much needed infusion of cash, Rothman said.

“The deal with Dell shows that if you clean up a lot of the operational things there's clearly opportunities to find large upstream buyers that want some additional real estate in the security market,” Rothman said. “This is a compelling deal; Dell is trying to expand their breadth with enterprise customers and they're reasonably considering they've gaps of their product line and want to fill them.”

Dell was steadily expanding its security portfolio. It all started selling managed security products and services to midsize businesses by acquiring SecureWorks in 2011. It also acquired Kace Networks, a desktop vulnerability and patch management appliance for small and midsize businesses.

At the time of the SecureWorks acquisition, Dell said it had to add security services to its portfolio. It was currently selling infrastructure services, distributed computing services, storage services and alertness management. Analysts say the corporate move suggest it's moving upwards from selling to small and midsize businesses to bigger enterprises.

SonicWall's next-generation firewall is geared toward larger enterprises, including government, university and repair provider deployments that require scalability, Dell said. SonicWall's centralized management system is utilized by network administrators to administer security appliances across a distributed network. Security components supported by SonicWall include secure remote access, email security, backup and recovery, and policy, management and reporting. The corporate has greater than 130 patents, registered and pending, and develops all of its own key security gateway intellectual property, Dell said. 

SonicWall's competitors include Barracuda Networks, Fortinet, Stonesoft, Sophos and WatchGuard. The market is dominated by other vendors, including industry networking giants Cisco Systems, Check Point, Juniper and Palo Alto Networks.

Rothman said Dell's challenge could be easy methods to cleanly fit SonicWall into its portfolio without having organizational issues. “It's not clear who's going to be running the day-to-day,” Rothman said. “Dell has an incredible go-to-market engine for SonicWall's products, but SonicWall does boxes, it's not a software or services player.”

Dell said SonicWall has approximately 300,000 customers. It also has a robust channel program, consistent with Dell. SonicWall's channel should be combined with Dell's PartnerDirect program, the company said.

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