1. Business

Silicon Valley firm to buy Tampa's ConnectWise, making millionaires out of scores of its employees

But 110 employees, 81 in Tampa, were laid off after a review determined their jobs weren't essential going forward. Still, even laid-off employees will be paid for stock the company issued them.
ConnectWise CEO and cofounder Arnie Bellin
ConnectWise CEO and cofounder Arnie Bellin
Published Feb. 25, 2019

TAMPA — Monday was a day of highs and lows at home-grown software company ConnectWise.

The good news: ConnectWise announced it is being bought by a Silicon Valley private equity firm in a deal expected to create 300 new local jobs in coming years and pay $270 million to about 1,000 employees — 70 who will receive payouts of $1 million or more.

The bad news: 110 employees, 81 of them in Tampa, lost their jobs in a company-wide realignment. The cuts followed an analysis of the company's jobs — the first such review after a series of acquisitions over the past several years — to determine which positions were essential and which were not. Every department was affected, company executives said.

For top management, the tone was upbeat, and the focus was on the wealth being created by ConnectWise's employee stock plan.

"It will change the lives of hundreds of families in the Tampa Bay area," ConnectWise co-founder Arnie Bellini told the Tampa Bay Times. "Think about all that money going into the Tampa Bay economy. How cool is that?"

Terms of the deal with Thoma Bravo, a buy-and-build firm that has invested $30 billion in software and tech firms, were not disclosed. The sale is expected to close Thursday.

'We need one great success story': Can ConnectWise achieve national success? Arnie Bellini hopes so

ConnectWise is privately held, but has issued restricted stock to employees once a year. Now employees, except for those hired after the last stock issuance, will split a total of $270 million for their shares. Seventy will receive at least $1 million, Bellini said, and virtually "everybody's getting something." One will be paid $40 million.

"This deal's huge for the Tampa Bay area," ConnectWise board member Stan Levy said. "If you look back at Silicon Valley, many companies were started by former employees of very successful companies."

Laid-off employees who were in the stock plan will receive a range of payouts, too.

"Some people will not have to work after this based on their (stock) payouts," ConnectWise chief talent officer Jen Locklear said.

For those that do, ConnectWise has brought in a human resources consulting firm, LivingHR of Tampa, to help them find similar jobs, update their resumes and LinkedIn profiles, and provide workshops about the job market.

"We knew that working with them," Locklear said, "we could get our people back into the workforce as quickly as they wanted to get back in."

Bellini and his family own about 60 percent of ConnectWise, but he said he wanted the company to be a meritocracy.

"If you work hard and if you are dedicated and passionate about our vision and mission, I want you to have a piece of the business," he said.

Bellini, whose father worked for IBM, launched ConnectWise with his brother David in 1982 in a bedroom of their parents' Tampa home. The company has grown explosively over the past decade as it has acquired, integrated or developed its own business-management applications that its customers access via cloud computing. It now has revenues of $240 million a year, with seven offices in the United States, India, the United Kingdom and Australia.

A graduate of Tampa Catholic High School, the University of Florida and the University of South Florida's College of Business, Bellini, 60, is known for his commitment, drive and hunger for big challenges. Outside of work, he swam the English Channel in his 50s, and has swum the 29 miles around Manhattan Island and the 21 miles from Los Angeles to Catalina Island.

"Square that, and you get some feeling of what it took to build up ConnectWise," said former Tech Data CEO Steve Raymund, a member of ConnectWise's board until the sale goes through and the board is dissolved.

ConnectWise began exploring external investments that would allow it to accelerate its growth and make strategic acquisitions five years ago. It first considered doing an initial public offering of stock, then changed directions. It ended up talking to Cisco about a possible strategic investment as well as to eight different private equity firms.

Thoma Bravo was the "clear and obvious choice," Bellini said, because of its philosophy, approach to management and dominance in what's known as "Software-as-a-Service," or SaaS, technology.

Together Thoma Bravo and ConnectWise have outlined a five-year plan that is expected to add about 300 jobs to ConnectWise's operations in the Tampa Bay area. Once the deal closes, Bellini will become an advisor to the company and Jason Magee, currently ConnectWise's president and chief operating officer, will become chief executive officer. Magee, 43, joined ConnectWise from CA Technologies in 2011 and became chief operating officer in 2016. Since then, ConnectWise has grown at a 21 percent cumulative annual rate.

Going forward, ConnectWise plans to focus on simplifying cybersecurity for its customers. It has already spent $8 million to buy the Sienna Group of Tampa and invested $7 million in Perch Security, also of Tampa.

Also, a new stock plan has been laid out to continue to give ConnectWise employees ownership in the company. It will be launched in 2020 assuming the company delivers on its performance goals for 2019.

Finally, Bellini hopes the deal focuses the attention of heavy-hitting tech investors on the Tampa Bay area, which he believes is ripe for growth.

"Tampa Bay can produce 20 more ConnectWises," he said. "We need to get busy, and I'm going to help."

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