Highly valued security company Tanium Inc is allowing its co-founder, employees and some early investors to sell $100 million of stock to private equity and venture funds in a secondary sale that reduces pressure for an initial public offering.
The deal values Emeryville, California-based Tanium at $3.75 billion after the transaction, Chief Executive Officer Orion Hindawi told Reuters.
He said half of the proceeds will go to his father, David Hindawi, Tanium’s co-founder and executive chairman, who wants the money for charity.
The largest buyer is private equity firm TPG, with late-stage venture firm IVP and others taking smaller amounts of the common stock. Venture firm Andreessen Horowitz, which has put more than $100 million into Tanium in multiple rounds, is not buying or selling.
Hindawi said Tanium itself did not need the money, having $300 million in cash and positive cash flow, but wanted to allow longtime investors and employees to benefit from the company’s success without an IPO.
“I don’t want to feel compelled” to go public, he said.
Though Hindawi had been talking about a public offering this year only a few months ago, he said he reconsidered after other companies went public and were whipsawed by the markets.
He said Tanium sales were doubling annually and that greater scale would remove volatility in the event of a later public stock offering.Tanium’s customers include the Department of Defense and large companies that install the company’s software on all of their computers to track what programs are running and rapidly install patches to that software.
A number of senior executives have left in the past year, and media reports highlighted complaints about Hindawi’s management style and allegations by a handful of employees that they were fired just before options vested.
Hindawi said a board investigation found no systematic terminations, and he said the company had lost no customers.
Hindawi is bringing new blood into the executive ranks to help with the management issue, including chief operating officer and chief financial officer Fazal Merchant, a former DreamWorks Animation CFO, and chief technology officer Chris Bream from Facebook, both of whom started in their new roles over the past week. Hindawi had been both CTO and CEO.
Though the liquidity from the secondary sale addresses one big concern of longterm workers, Hindawi said the funding round began well before the recent articles and continued afterward without any change in participants or terms.
Source: Reuters.com