Colorado Springs-based Cherwell Software will be acquired by Salt Lake City information technology security company Ivanti in a deal backed by two private equity investment firms, Ivanti announced Tuesday.
Affiliates of Clearlake Capital Group and TA Associates are financing the deal; terms of the transaction were not disclosed. Cherwell CEO Sam Gilliland said the deal is expected to be completed in about two months, depending on how long regulatory approvals take. Cherwell employs more than 500 worldwide, mostly at its Colorado Springs headquarters, to develop and sell software that helps large businesses automate a major part of their information technology, human resource, facilities management and other operations.
Ivanti and Cherwell have some common roots. Ivanti was formed by Clearlake in 2017 by merging several information technology companies Clearlake had acquired, including HEAT Software, formerly known as FrontRange Solutions, which was based in Colorado Springs before moving to California in the late 1990s. Former FrontRange CEO Vance Brown and two other FrontRange executives, Tim Pfeifer and Arlen Feldman, started Cherwell in 2004.
Colorado Springs has been a hub for the IT service management industry since the 1990s, when Ron Muns moved Bendata (which later became FrontRange) to Colorado Springs and later started the Help Desk Institute here.
Ivanti, derived from the Italian word "avanti" for forward or ahead, has a team of 65 employees in Colorado Springs that handles customer retention for its IT service management and related products. The team came from FrontRange, which Clearlake acquired in 2015.
"There is a lot of historical overlap between these two firms," Gilliland said. "When this deal is closed, I would expect the Ivanti and Cherwell teams in Colorado Springs to be consolidated. I think this bodes well for (Cherwell's) employees not just in Colorado Springs but worldwide. I believe Ivanti sees value in both Cherwell's people and the technology. They see enterprise service management as a core offering for them and there are a lot of enterprise and IT service management resources concentrated in Colorado Springs."
Brown, Cherwell's former chairman and CEO who still serves on Cherwell's board, said he "wouldn't have supported (this transaction) if it was not in the best interest of Cherwell's employees, customers and the city of Colorado Springs." He said he is "proud of the (Cherwell) team because of the global influence it has with customers all over the world. I am also proud of Colorado Springs and the talent that has grown out of here in this industry and continues to exist and grow."
Ivanti said in the release that buying Cherwell, its third acquisition in the past two months, "is expected to provide significant scale in the large and growing IT service management market. In addition, Cherwell has made substantial investments in its service management platform over the past few years, providing Ivanti with a strong foothold in an attractive and high-growth adjacent end market."
Boston-based TA made an undisclosed investment in Ivanti in August that financed its acquisition of publicly traded MobileIron for $872 million and Pulse Secure from Siris Capital Group for an undisclosed amount. The deals helped the company offer businesses security platforms to discover, manage and protect devices used by remote workers, which became a booming market after the COVID-19 pandemic prompted many firms to move many of their employees to their homes.
Ivanti CEO Jim Schaper, who will head the combined company, said the deal "will allow Ivanti to not only strengthen our market leading position in the IT service management market but also fuel further expansion in the high growth enterprise service management space to manage workflows for business units beyond IT. The addition of Cherwell's product portfolio will allow Ivanti to capitalize on Cherwell's strong vertical presence in health care, higher education and a number of other attractive verticals."
Schaper was hired as Ivanti's CEO a year ago after founding and serving as CEO of Infor, a New York-based enterprise software company that grew from $40 million to $2 billion in less than five years and was acquired last year by Koch Industries. He also had been CEO of Dun & Bradstreet Software and Primis as well as executive vice president and chief operating officer of Per-Se Technologies that was acquired by McKesson.
Cherwell started by developing software to operate an organization's help desk and information technology service management operations and grew quickly, doubling revenue annually in its first seven years. Brown, Pfeifer and Feldman named the company for a river in central England that is a major tributary of the River Thames where authors J.R.R. Tokien and C.S. Lewis walked together and talked about the stories that would later become the "Lord of the Rings" trilogy and "Chronicles of Naria" series of books.
Cherwell landed a $25 million investment from Insight Partners in 2012 and $50 million from private equity giant KKR in 2017 to make acquisitions and expand into new markets. KKR bought out most of Insight's stake a year later for $172 million, becoming Cherwell's largest shareholder . Four months later, Cherwell hired Gilliland, who had headed travel technology giant Sabre, as Cherwell's CEO.