SolarWinds Spin-off (Managed Service Provider Business) Notes

April 2, 2021 Updates

SolarWinds (SWI) announced this week the initial public filing of a Form 10 registration statement with the U.S. Securities and Exchange Commission for its spin-off of its managed service provider (MSP) business into a standalone, separately-traded public company to be named N-able, Inc.
A managed service provider (MSP) delivers services, such as network, application, infrastructure and security, via ongoing and regular support and active administration on customers’ premises, in their MSP’s data center (hosting), or in a third-party data center.
N-able provides cloud-based software solutions for MSPs, enabling them to support digital transformation and growth within small and mid-size enterprises. It partners with over 25,000 MSP partners, empowering them to deliver best-in-class managed services in a scalable and repeatable way. The spin-off represents 30% of total revenue and is growing faster (+15%) than the Remainco (+4%).
The Remainco will be focused on providing software solutions to help companies manage all IT needs (network utilization and performance analytics, etc.).
The company is trading at 15.5x forward EBITDA and 16.0x free cash flow and seams reasonably valued. I will dig into the sum-of-the-parts valuation to see if this transaction will unlock value. It is expected to be completed in Q2 2021.
The spin-off transaction was originally announced in August 2021.