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Founder-CEO following Dell example to realize long term enterprise value


For a report of shareholder alternatives to realize the same long term enterprise value the company founder advocates in his interview below, see


Source: Diginomica, November 10, 2014 interview

CEO sees TIBCO as ‘going private’ trendsetter

November 10, 2014 By Martin Banks

SUMMARY: Far from seeing TIBCO’s acquisition as any form of failure or escape route, CEO Vivek Ranadive views the company as being in the vanguard of an accelerating trend of businesses walking away from the stock markets.

One of the most common assumptions made when it was announced that TIBCO was to be acquired by Vista Equity Partners was that CEO Vivek Ranadive had defined and engineered his exist strategy from the company.

But it seems this not the case. Talking at last week’s TIBCO NOW conference in San Francisco, he told diginomica that he has every intention of staying at the helm of his ship.


Vivek Ranadive

Indeed, he sees the decision to sell as an important move out of the clutches of the stock markets by going private. He is grateful that Michael Dell did it first so he doesn’t have to do a lot of evangelising on what he sees as a growing need and a trend that is just starting to roll:

} What I have to do is continue what I am doing with customers. That is what I do, and what I like to do. And I have a great team to do a lot of the day-to-day management. That will remain unchanged.

But in staying at the helm the nature of the ship he is steering obviously changes as there is now the relationship with Vista to add to the mix, though he does not see too much change happening:

} As a public company I had a board. It is true it is an entrepreneurial company and I was the founder, but my role will be as the chairman and the people I have groomed over the last 15-plus years I see carrying on with what we have started. And I will guide them and help Martin Taylor, Vista’s Primary Operating Principal.

My role at TIBCO is similar to what I do at the Sacramento Kings [the US basketball team he owns and references with glee at every opportunity]. Basically I am the guy who is the irritant that forms the pearl. To make something of value you need an irritant and I irritate and annoy.

Vista of opportunity

Speaking during the opening keynote at the conference, Taylor said that Vista sees possibilities of collaboration between partner companies, and would like to see them exploited. Ranadive has already spotted a couple and has his sights set on them.

One possibility, he suggested, is the UK company, Misys, which has a good presence in the banking and financial services sector. And this continues to be seen as a possible partnership even if, as some rumours suggest, Vista ends up divesting itself of that business.

What about acquisitions? Tibco has a long, and pretty successful history here, but as part of Vista the question has to be whether this will this continue, and will they be TIBCO decisions or will it be for Vista to decide?

He indicated that this had already been discussed extensively and have already discussed companies that could become part of the TIBCO platform:

} It will be a collaborative relationship, and we have already talked about companies that it would be good to add to the platform.

Michael Dell did it first


He sees TIBCO as being in the early vanguard of businesses that eschew the stock market in future, and the trend will, he expects, move beyond the hitech industries of IT. To the question of whether it is a growing trend he was explicit:

} Yes, without question. There are going to be a large number of public companies that decide it is too much hassle to be a public company and will be thinking of going private. I think many of those companies going private will be selling bits and pieces off, so I think it represents an opportunity. The philosophy now is to think long term and to build a successful and growing company.

He went on to explain why he thinks this trend will gather pace over the near future. Not least amongst the reasons is the view that investors are now no longer investing in companies and are now simply playing a `casino’:

} What I think our capital markets have a hole in them. They is a shift to very short-term performance. If you have a company that uses large amounts of money and has a pleasing multiple then there is a place for it, but if you have a company that is profitable but is investing for the future then that is now better done as a private company.

So I think the market is going to self-select and businesses are going to do what Michael Dell has done. He has found he can do a lot more with the company now.

Basically, the view is that if a company wishes to make any progress, or significant changes as the markets change, being privately held is fast becoming the only sensible option. Ranadive certainly feels it is now close to impossible to develop in the restricted environment of pleasing the market’s quarterly need for a `fix’.

Private lives

A good example here is the references that were made to Tibbr being delivered on subscription and the shift of emphasis this gave to the expected TIBCO bottom line. He acknowledged that people in the capital markets still require education on the changes occurring in hitech industries:

} It doesn’t change the value proposition, in fact it increases it. I have tried, to educate them but it is pretty time consuming, and you still have to run your business. So I think this is the time when businesses will realise it is too costly and too time consuming to bother with the stock market.

He does see it doing the image of private equity companies some good, however. Many people saw the combination of private equity and TIBCO and automatically thought of the old style of equity management – asset stripping. Ranadive sees significant changes here, and used his Civilisation 3.0 metaphor (used to encapsulate the changes that the cloud/mobile/high agility collective is brining in its wake) to define the equity management changes:

} While I am talking in terms of Civilisation 3.0 I might as well extend the metaphor to talk about Private Equity 3.0. Version 1.0 was largely about leveraging assets. Then companies like Vista came along with Version 2.0, and said leveraging cashflows and not just assets was the way to go.

Version 1.0 was just a financial skill of leveraging assets, but 2.0 became more of an operational skill. But now there is 3.0, which is about building businesses. This is more about strategic ownership than measuring the cashflow.

My take

I have long held the view that hi-tech businesses going public were asking for unwanted, and usually unjustified financial trouble. Now it seems that an escape route is opening up for them.

And if Vista does represent a new model of equity management business, a new business model for the industry may be opening up that allows businesses like TIBCO to get on with what they are good at.

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