When computer security giant Symantec agreed to off-load its data storage business to a D.C. buyout firm for $8 billion last summer, it looked like the sale of a unit that never quite lived up to its potential. After all, Symantec bought Veritas for $13.5 billion in 2005.
But Bill Coleman, who took over as chief executive this week, says he was pleasantly surprised by what he found under the hood when he started evaluating the company for its new owners, the Carlyle Group, a year ago.
“I didn’t expect to find nearly as strong an asset, nearly as strong a team,” he said in an interview Monday morning, on his way to his first meeting as CEO.
Veritas is a software company headquartered in Mountain View, Calif., playing in the evolving and complex world of data storage and management. The company has roughly 7,800 employees operating in 58 countries and says it works with 86 percent of Fortune-500 companies. The company generated $2.6 billion in revenue for Symantec in fiscal year 2015.
Symantec became an industry leader in anti-virus software with its flagship product Norton Antivirus, but in recent years has faced stiff competition from new Silicon Valley rivals like FireEye and Palo Alto Networks, which focus on companywide cybersecurity.
Symantec had been looking to off-load its data management business for more than a year. In October 2014 it announced plans to spin off Veritas into a separate publicly-traded company, but veered towards a sale the following year. Reuters reported as early as April 2015 that Symantec had been approaching companies and private equity firms about a potential deal, and it wasn’t until August that it finalized an agreement with Carlyle.
Veritas’ new CEO Coleman is a Silicon Valley veteran best known for founding BEA Systems, a business software company bought by Oracle in 2008 for $8.5 billion. Before that he was a vice president at Sun Microsystems, a computer company that was also bought by Oracle.
As an executive, Coleman has made frequent use of so-called tuck-in acquisitions to build his companies. He says BEA bought a whopping 24 companies under his leadership.
Coleman says he plans to follow a similar game plan at Veritas. He says he’s currently looking for so-called strategic acquisitions to develop a stronger cloud storage and information management footprint.
Cloud storage is an emerging field in data management in which chunks of information can be split across multiple servers rather than stored in one place. As corporations look for new ways to organize complex information, the sector has become a growth area for companies like Amazon and Google.
As a private company, Coleman said he has more leeway to embark on acquisitions that don’t generate immediate profit. Public companies can face more pressure for short-term results.
He insists the Carlyle group, an $188 billion private equity fund known primarily for leveraged buy-outs, is in it for the long term.
“This is not the 1980’s private equity,” Coleman said of Carlyle’s plans for the company. “When you look at how Carlyle and KKR and the big guys are today, they’re in to build value.”
Coleman says Veritas will need to beef up its sales and customer service apparatus and find new ways to streamline the business now that it is no longer part of Symantec
“They haven’t had a culture of being a company, of being focused on that long-term customer goal,” Coleman said. “They’ve been part of a big bureaucracy where the systems and processes aren’t necessarily efficient.”
The company that would become Veritas was founded in 1983, went public a decade later and was acquired by Symantec in 2005. In 2007 the Securities and Exchange Commission accused five former Veritas executives of accounting fraud, alleging that members of the company’s C-suite had lied to independent auditors and falsely inflated financial statements, affecting financial statements from 2000 through 2002. By July 2012, all five executives had agreed to settle the charges.