Dell Sells Boomi to Francisco Partners & TPG for $4 Billion

Dell's Strategy to Reduce Debt Through Asset Sales

It is generally understood that Dell has been grappling with a substantial debt following its 2016 acquisition of EMC. This year, the company appears to be actively working to diminish this debt through significant asset divestitures, amounting to several billion dollars.

The initial phase involved the separation of VMware into an independent entity last month. This strategic move is projected to generate approximately $10 billion in capital.

Boomi Acquisition by Private Equity Firms

The second step, widely anticipated, was officially announced recently: the sale of Boomi to a consortium of private equity firms for $4 billion. Francisco Partners and TPG are collaborating to acquire the integration platform.

Boomi shares similarities with MuleSoft, which was acquired by Salesforce in 2018 for $6.5 billion. Both companies specialize in resolving integration challenges by establishing connections between diverse systems.

The Value of Integration Services

Dell has accumulated numerous components through various acquisitions over time. Boomi represented a valuable asset for integrating these components and ensuring their seamless operation. However, the immediate need for capital has taken precedence.

The demand for integration services is increasing as organizations seek to leverage data currently isolated within separate systems. Boomi’s capabilities align with this growing need, as highlighted by executives at Francisco Partners.

“Integrating and connecting data and workflows across applications is a crucial business function,” stated Dipanjan Deb, CEO of Francisco, and partner Brian Decker. “We believe Boomi is uniquely positioned to assist companies of all sizes in transforming data into a valuable resource.”

Boomi's Future Outlook

As expected, Boomi’s CEO, Chris McNabb, expressed optimism regarding the acquisition and the potential for accelerated growth under new ownership. “Partnering with leading investment firms like Francisco Partners and TPG will enable us to enhance our customers’ ability to utilize data for competitive advantage,” McNabb commented.

“This next stage of growth will empower Boomi to further innovate and expand its market presence, delivering increased value to our customer base,” he added.

While these statements may hold merit, the company is transitioning from being a part of a large corporation to being managed by two private equity firms. The future trajectory remains uncertain.

Boomi's History and Dell's Financial Position

Founded in 2000, Boomi was acquired by Dell in 2010. Currently, it serves 15,000 customers. Dell’s existing debt has been widely reported, and the recent completion of multiple multi-billion-dollar transactions represents a substantial sum.

Although Dell has not explicitly confirmed that the proceeds from this sale will be used to reduce debt, as was the case with the VMware transaction, it is reasonable to assume that this will be the primary application of the funds.

The transaction is anticipated to be finalized later this year, pending standard regulatory approvals.