ABOUT AIRWATCH
Ownership: Privately held
Chairman: Alan Dabbiere, a co-founder who also founded Manhattan Associates
Headquarters: Perimeter Center West, Sandy Springs
Business: Software that helps corporations and other enterprise customers manage mobile devices securely
Employees: 1,600 —- including 1,000 locally
Source: Staff research
It’s often bad news when a hometown company gets gobbled up by an out-of-state buyer.
That might not be the case with Wednesday’s announcement that a California company plans to buy fastgrowing Atlanta-based software firm AirWatch for $1.5 billion. Executives and experts said the deal could bring more tech business to Atlanta and even fuel new ventures here.
“You don’t spend $1.5 billion on a company like this to shrink it,” AirWatch co-founder Alan Dabbiere. “It’s a growth story.”
He said AirWatch is not only expected to remain in Atlanta following the sale, but will oversee some of buyer VMware’s operations and could add jobs.
About half of privately held AirWatch’s 1,600 employees hold stock or options in the company and can expect to share about $300 million from the deal. Some might use it to bankroll their own business ideas.
“We’ve created a lot of millionaires, quite frankly,” Dabierre said. “I think this puts an exclamation point on Atlanta as a good place to start a company and grow.”
AirWatch, launched in 2003, makes software to provide secure connections to mobile devices like smart phones and tablets. It added hundreds of jobs in Georgia and elsewhere in the past year.
About 1,000 employees work in the Atlanta area, including the headquarters in Sandy Springs.
Palo Alto-based VMware, which designs “cloud” software, agreed to pay $1.2 billion in cash plus $365 million in later payments for the much smaller AirWatch, which has yet to be profitable, according to Dabierre.
Executives are fond of portraying buyouts as “win-win” deals on both ends, only to later impose cuts on the purchased company or even move it entirely.
There’s reason to believe this will be different, some industry watchers said. Not only will the deal rev up VMware’s growth, they predicted, but AirWatch should keep adding jobs and spawning more software start-ups.
AirWatch is not Dabbiere’s first tech startup. He founded Manhattan Associates in California in 1990, later moving it to metro Atlanta and taking the company public.
A former Manhattan Associates employee, John Marshall, later founded the company that morphed into AirWatch. He is now AirWatch’s CEO. Dabbiere joined him as co-founder.
Daniel Ives, an analyst with FBR Capital Markets in New York, said AirWatch’s example and its employees’ new-found wealth could inspire some to go out and start their own companies.
“I imagine there’s a few champagne bottles being popped,” he said. “I think an acquisition like this speaks volumes. It could spawn more successful ventures in itself.”
AirWatch does not release financial results, but Ives expects it to have $75 million in sales this year, compared to VMware’s $6 billion. VMware is about 80 percent owned by EMC Corp., a Massachusetts-based data storage computer maker with $26 billion in annual revenue.
For VMware, AirWatch provides the “secret sauce” that will allow it to more easily tap the burgeoning world of mobile device users, said Ives. For AirWatch owners and employees, “It takes them from the minor leagues to playing in Yankee Stadium,” he said.
The AirWatch sale gives the region “some cachet” and will bring visibility to other metro Atlanta tech firms from out-of-state investors, said Tino Mantella, the president of Technology Association of Georgia, which counts AirWatch among its major supporters.
Given metro Atlanta’s low cost of living, its access to nonstop airline flights and the region’s concentration of technology security and mobility companies, it would not be a surprise if VMware kept the core of AirWatch’s operations here and expanded on them, Mantella said.
Such technology jobs are coveted for many reasons, said Roger Tutterow, a Mercer University economist. They tend to be high-paying, the workers are highly skilled and tech companies tend to plant their operations near other firms in their industry and research universities where they can nurture their products and tap into talent. It becomes a cycle that feeds upon itself, Tutterow said.
“These are the types of plums that economic developers want to hold onto because the (the payback) tends to be robust,” Tutterow said.
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