Backup, Management Buyouts, and Quest Software

hand shaking

Quest Software announced that it was going private in a $2B management buyout.  At the financial level, it’s an interesting transaction: 2.1X Quest’s 2011 revenue of $857M and 1.9X Quest’s forecasted 2012 revenue of $940M.  The market has voted that we’re going to hear a lot more on the deal – the 19% premium on the stock price has been deemed as insufficient as indicated by the rise in the share price above the announced deal value.

But what does it mean for backup?

Quest has a lot of data protection lines – from vRanger for 100% virtual environments to NetVault Backup (which was formerly BakBone – Quest acquired the company in 2011 because – well, I’ll quote the Quest Software (QSFT) annual report:)

The comparison of our operating results for fiscal year 2011 against the same period in 2010 is impacted by our acquisitions, which are included only from their dates of acquisition. We acquired BakBone in the first quarter of 2011 to complement our data protection portfolio, particularly in the areas of physical server backup and recovery. The BakBone acquisition gives us additional technologies to provide data protection solutions across heterogeneous physical, virtual and application-level environments, enhancing our competitive position in the data protection market.

Bakbone was the 22nd acquisition by Quest since 1988.

I think that the rationale for the acquisition was sound.  Virtualization, led by VMware with Hyper-V getting ready to really launch a really blistering offensive in 2012 with Windows 8, is incredibly important – but the further up in an organization you go, the more important it is to support heterogeneity – both for the past but also for an always uncertain future.

However, buying a company is different than offering an integrated, all-in-one, backup, archiving, replication (disaster recovery), and instant recovery solution.  What you want to look for is a unified file/block agent/agentless architecture.  What this means is software that has an architecture that is suitable for both virtual and physical environments, now and in the future.

Of course, I’m biased – because that’s what the company I work for offers (Unitrends.)  It’s one of the foundational elements of our technical architecture – and our company’s strategy.

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