CEO sees TIBCO as ‘going private’ trendsetter
November 10, 2014 By
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
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.
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:
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.
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?
indicated that this had already been discussed extensively and have
already discussed companies that could become part of the TIBCO
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
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.
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
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.
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’.
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
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.
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.
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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