Target Information

Thrive, headquartered in Foxborough, Massachusetts, is a premier provider of cybersecurity, cloud, and IT managed services. The company specializes in offering outsourced IT and cybersecurity solutions tailored for mid-market businesses, small enterprises, and sophisticated SMBs across various sectors including financial services, healthcare, professional services, and government. Thrive's significant growth is evidenced by its 15 acquisitions since 2020, establishing it as a leading entity in the technology outsourcing landscape. In 2024, Thrive earned recognition on CRN’s Managed Service Provider 500 list, highlighting its status among the top technology providers in the MSP sector.

Thrive operates with a mission to enhance business efficiencies through standardization, scalability, and automation, providing clients with exceptional returns on technology investments. The leadership team, under President Bill McLaughlin, has maintained a commitment to scaling the business in response to the increasing complexity in IT and cybersecurity needs faced by companies today.

Industry Overview in the United States

The cybersecurity and IT managed services industry in the United States continues to exhibit robust growth as businesses increasingly seek to protect sensitive data and ensure operational efficiency. Factors such as the rise in cyber threats, the growing complexity of IT environments, and heightened regulatory requirements are driving demand for advanced managed services. The market is characterized by a proliferation of service providers, all competing to offer innovative solutions tailored to the distinct needs of diverse industries.

Recent trends indicate that organizations are increasingly opting for managed service providers that can deliver comprehensive security solutions alongside traditional IT services. The convergence of cybersecurity and IT management is becoming more prevalent, as businesses recognize the necessity of integrating these services to navigate evolving threats effectively. This integration creates vast opportunities for MSPs and MSSPs that excel in delivering customer-centric services.

Moreover, the mid-market and small enterprise segments are witnessing a significant uptick in demand for outsourcing IT and cybersecurity functions. Companies in these categories often lack the resources to manage these growing complexities in-house and are turning to external partners for expertise. This shift underscores the potential for firms like Thrive to capitalize on their experience and capabilities to cater to this expanding market.

In light of these industry dynamics, the United States stands as a lucrative landscape for technology outsourcing, especially for those providers that prioritize client relationships and adapt swiftly to the changing technological needs of their customers. The consistent growth trajectory indicates a promising future for MSPs and MSSPs poised to deliver innovative solutions.

Rationale Behind the Deal

The strategic investment from Berkshire Partners and Court Square Capital Partners is set to unlock significant growth for Thrive, enhancing its competitive position within the IT managed services landscape. This partnership aligns with Thrive's vision of scaling operations to meet the intricate demands of its clientele. With the financial backing of reputable firms, Thrive is well-positioned to expand its offerings and capabilities, ensuring it remains ahead of the curve in delivering cutting-edge cybersecurity and managed services solutions.

Additionally, the exit of founding investor MC Partners illustrates Thrive's transformation and growth, highlighting the level of confidence that new investors have in the company's direction and leadership. This investment is expected to provide Thrive with the resources necessary to fuel further innovation and market expansion.

Information About the Investor

Berkshire Partners, a well-established private equity investment firm, brings a wealth of experience and expertise in the IT sector, which is expected to play a pivotal role in Thrive's future endeavors. The firm’s history of partnering with management teams to scale businesses strategically aligns with Thrive's growth objectives. Candice Corvetti, Managing Director at Berkshire Partners, emphasized the importance of supporting Thrive during this transformative phase, which is crucial given the evolving challenges in IT and cybersecurity.

Court Square Capital Partners, a longstanding investor in Thrive, demonstrates a steadfast commitment to the company's vision and growth strategy. Their continuous investment approach reflects a strong belief in Thrive's potential to deliver exceptional results within the dynamic managed services landscape. According to Matt Dennett, Partner at Court Square, the firm sees substantial opportunities for Thrive to excel both organically and through expansions, reinforcing their commitment to the company.

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The recent investment in Thrive by Berkshire Partners and Court Square Capital Partners marks a significant milestone for the company, indicating strong future potential in an ever-evolving industry. The cybersecurity and IT managed services space is poised for continued growth, driven largely by increasing cyber threats and the need for businesses to adopt efficient operational practices. Given Thrive’s impressive track record, strategic investments, and a talented leadership team, this deal could be seen as a medically sound investment for both investors.

Thrive's past success and capability to achieve substantial growth through acquisitions bolster the view that this investment will yield positive results. The combination of financial support and industry expertise provided by Berkshire and Court Square is likely to enhance Thrive's ability to innovate and meet client needs effectively. Moreover, Thrive's comprehensive service offerings position it advantageously amidst the growing demand for integrated IT and cybersecurity solutions.

However, it is essential to acknowledge that the competitive landscape remains fierce. Thrive must continue to differentiate itself through superior service delivery and by leveraging its NextGen platform to offer exceptional value to its customers. If these strategies are executed effectively, the investment could not only stabilize but also accelerate Thrive's trajectory in this lucrative market.

In conclusion, this strategic investment marks a promising phase for Thrive, with the potential for significant growth. The deal lays a strong foundation for Thrive to enhance its service offerings, capitalize on market opportunities, and reinforce its status as a leader in the IT managed services industry.

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