SolarWinds has revealed it is considering spinning off its SolarWinds MSP business into its own separate publicly traded business.
The IT software firm said the potential change would help to strengthen its separate business strategies, with the new standalone MSP business to focus on aiding MSPs in the delivery of outsourced IT services to SMBs.
As part of any spin-off, SolarWinds would retain its Core IT Management business with its focus primarily on corporate IT and enterprise businesses.
In a statement, the firm explained that these changes would enable shareholders to better evaluate the performance and potential of each business entity while providing each the space to implement its own strategies and capital allocation.
"We are exploring a potential spinoff transaction because we believe that, if completed, a spinoff may enhance the successful operation of both the MSP and the core IT management businesses, and increase their respective values," commented Kevin Thompson, president and CEO of SolarWinds.
"By splitting the two businesses into separate companies, it may be that the business and related investment, spending and capital allocation policies of each company could be managed consistently with each business’ objectives."
SolarWinds added that establishing specific and independent goals for the separate entities would enable them to manage investments and objectives that are tailored more closely to their respective markets.
"Should we move forward with the spin-off, we would expect that the Core IT Management business would be focused on maintaining our best-in-class profit margins, while the MSP business would be focused on long-term growth with strong, differentiated profitability metrics for a SaaS business," Thompson added.
Should the move come to fruition, SolarWinds said it will be structured as a tax-free, pro-rata distribution to all SolarWinds shareholders as of a record date to be determined by its board. That means, upon the effectiveness of the transaction, shareholders would own shares in both businesses.
Any move is not expected to be completed before the end of Q1 2021, SolarWinds said.
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