Clearlake and Francisco Partners Complete Acquisition of Black Duck Software, Formerly Known as Synopsys Software Integrity Group

Rhea-AI Summary

Clearlake Capital Group and Francisco Partners have completed their acquisition of Synopsys Software Integrity Group, now rebranded as Black Duck Software, Inc. The transaction, valued at up to $2.1 billion, includes a potential $475 million cash payout based on future performance. Jason Schmitt will continue as CEO of the newly independent company, which retains its comprehensive portfolio of application security solutions.

Black Duck aims to help organizations build trust in their software for innovation and business transformation. The company's product lineup includes the Polaris SaaS Platform, Coverity Static Analysis, Black Duck Software Composition Analysis, and other security testing tools. As a standalone entity, Black Duck is positioned to focus on delivering cutting-edge application security solutions to address evolving cybersecurity threats.

Positive

• Acquisition valued at up to $2.1 billion, indicating significant market value
• Potential for additional $475 million payout based on performance metrics
• Retention of existing leadership team, ensuring continuity and expertise
• Independent status allows for increased focus on application security solutions
• Comprehensive portfolio of security products recognized as a Leader by Gartner

Negative

• Transition from Synopsys may pose integration and operational challenges
• Increased competition as a standalone company in the application security market
• Potential financial strain from acquisition costs and operational restructuring

Insights

Financial Analyst

The completion of Clearlake and Francisco Partners' acquisition of Synopsys' Software Integrity Group, now rebranded as Black Duck Software, marks a significant shift in the application security landscape. The $2.1 billion deal, including a potential $475 million earn-out, demonstrates the high value placed on application security in today's market. This transaction allows Synopsys (SNPS) to focus on its core EDA and IP businesses while potentially realizing additional value through the earn-out structure. For investors, this move could streamline Synopsys' operations and potentially improve its profit margins. The newly independent Black Duck, with its comprehensive portfolio and market leadership position, is now better positioned to capitalize on the growing demand for application security solutions. This strategic move could lead to accelerated growth and innovation in the application security sector, potentially creating new investment opportunities in the cybersecurity space.

Tech Expert

Black Duck's independence marks a pivotal moment in the application security industry. As a standalone entity, it can now fully leverage its comprehensive suite of tools, including static analysis, software composition analysis and dynamic testing. The company's leadership in the Gartner Magic Quadrant for seven consecutive years underscores its technological prowess. The rebranding to Black Duck, inspired by its flagship SCA solution, signals a focus on software supply chain security—a critical concern in today's development landscape. With the backing of Clearlake and Francisco Partners, Black Duck is poised to accelerate innovation, particularly in emerging areas like AI-driven security. This move could lead to more agile product development and quicker responses to evolving cybersecurity threats, potentially giving Black Duck a competitive edge in the rapidly growing application security market.

The standalone application security company continues its mission to help organizations build trust in their software to support innovation and business transformation

SANTA MONICA, Calif. & SAN FRANCISCO--(BUSINESS WIRE)-- Clearlake Capital Group (“Clearlake”) and Francisco Partners announced today that they have completed their acquisition of the Synopsys Software Integrity Group, establishing the newly independent application security company as Black Duck Software, Inc. (“Black Duck”). The transaction with Synopsys, Inc. (Nasdaq: SNPS), which was first announced on May 6, 2024, is valued at up to $2.1 billion, including up to $475 million in cash payable upon Clearlake and Francisco Partners achieving a specified rate of return in connection with one or more liquidity transactions.

The new Black Duck brand is inspired by its flagship software supply chain solution, Black Duck SCA, which has helped thousands of organizations around the world adopt open-source technology safely and securely for nearly 20 years.

As an independent company, Black Duck provides all the application security solutions previously available from the Synopsys Software Integrity Group. Black Duck’s mission is to help organizations build trust in their software so they can innovate and transform their businesses with new, emerging technologies like AI.

Veteran security leader Jason Schmitt, who joined Synopsys in 2020 as the general manager of the Software Integrity Group, will continue to lead Black Duck as its Chief Executive Officer. Black Duck also announced that it has appointed Joy Meier as Chief Human Resources Officer and General Counsel. The remainder of the existing Software Integrity Group’s leadership team will continue in their roles at Black Duck.

“We are excited to continue our partnership with Jason and the entire Black Duck management team as the company begins the next step of its journey as a standalone business,” said Brian Decker and Evan Daar, Partners at Francisco Partners. “Alongside Clearlake, we are excited to help extend the company’s leadership in the industry as a comprehensive next-generation application security testing provider. This next stage of growth will better serve its customers, while protecting their mission-critical software applications, and we are looking forward to bringing additional resources and expertise to keep accelerating its growth.”

"Black Duck provides critical technology that supports and enables enterprise-scale software development teams to protect their applications against rapidly evolving cybersecurity threats," said Prashant Mehrotra, Partner, and Sean Courtney, Principal, at Clearlake. "We are committed to supporting Black Duck as it continues to innovate and address the increasing demands for cutting-edge application security solutions with the help of our O.P.S.^® value creation framework.”

As a recognized market leader, Black Duck provides a comprehensive portfolio of application security products and services. As a newly independent company with a singular vision and focus, Black Duck is better positioned to deliver the leading solutions the market has come to expect.

“We’re excited to complete our transition from Synopsys to Black Duck with the support of Clearlake and Francisco Partners,” said Jason Schmitt, CEO of Black Duck. “I am proud of what we have accomplished to get here, and I am optimistic about our future as an independent company. With a comprehensive portfolio of application security solutions underpinned by differentiated technology and a talented team of experts, we enter the next phase of our journey with momentum and a renewed focus to help our customers build trust in their software.”

Black Duck’s portfolio, which has been named a Leader in the Gartner® Magic Quadrant™ for Application Security Testing¹ for seven consecutive years, includes:

• Polaris™ SaaS Platform
• Coverity® Static Analysis
• Black Duck Software Composition Analysis
• WhiteHat™ Continuous Dynamic Analysis
• Seeker® Interactive Analysis
• Defensics® Protocol Fuzzing
• Security Testing, Consulting, and Audit Services

For more information, read Jason Schmitt’s blog post and visit Black Duck's new website: www.blackduck.com.

Evercore, Deutsche Bank, and Barclays acted as financial advisors to Clearlake and Francisco Partners. Sidley Austin acted as lead legal advisor to Clearlake and Francisco Partners. Simpson Thacher & Bartlett also advised Francisco Partners. J.P. Morgan served as financial advisor and Cleary Gottlieb Steen & Hamilton served as legal advisor to Synopsys.

About Clearlake Capital

Clearlake Capital Group, L.P. is an investment firm founded in 2006 operating integrated businesses across private equity, credit and other related strategies. With a sector-focused approach, the firm seeks to partner with experienced management teams by providing patient, long-term capital to dynamic businesses that can benefit from Clearlake's operational improvement approach, O.P.S.^® The firm's core target sectors are technology, industrials, and consumer. Clearlake currently has over $85 billion of assets under management and its senior investment principals have led or co-led over 400 investments. The firm is headquartered in Santa Monica, CA with affiliates in Dallas, TX, London, UK, Dublin, Ireland Singapore and Abu Dhabi, UAE. More information is available at www.clearlake.com.

About Francisco Partners

Francisco Partners is a leading global investment firm that specializes in partnering with technology and technology-enabled businesses. Since its launch 25 years ago, Francisco Partners has invested in more than 450 technology companies, making it one of the most active and longstanding investors in the technology industry. With approximately $45 billion in capital raised, the firm invests in opportunities where its deep sectoral knowledge and operational expertise can help companies realize their full potential. For more information on Francisco Partners, please visit www.franciscopartners.com.

About Black Duck Software, Inc.

Black Duck Software, formerly known as the Synopsys Software Integrity Group, offers a comprehensive portfolio of application security testing solutions. The company helps organizations around the world secure their software quickly, integrate security efficiently in their development environments, and safely innovate with new technologies. To learn how Black Duck can help you build trust in your software, visit www.blackduck.com.

1. Gartner, Inc. "Magic Quadrant for Application Security Testing" by Mark Horvath, Dale Gardner, Manjunath Bhat, Ravisha Chugh, Angela Zhao, May 17, 2023.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241001535294/en/

Media Contacts:



Clearlake:

Jennifer Hurson

Lambert

jhurson@lambert.com



Francisco Partners:

Whit Clay / Jake Cohen

Sloane & Company

wclay@sloanepr.com / jcohen@sloanepr.com



Black Duck:

Liz Samet

Black Duck Software, Inc.

336.414.6753

esamet@blackduck.com

Source: Francisco Partners

FAQ

What is the new name of the Synopsys Software Integrity Group after the acquisition?

The Synopsys Software Integrity Group has been rebranded as Black Duck Software, Inc. after the acquisition by Clearlake Capital Group and Francisco Partners.

Who will lead Black Duck Software as CEO following the acquisition?

Jason Schmitt, who previously served as the general manager of the Synopsys Software Integrity Group, will continue to lead Black Duck Software as its Chief Executive Officer.

What is the total value of the acquisition of Black Duck Software (SNPS)?

The acquisition is valued at up to $2.1 billion, including a potential additional $475 million cash payout based on future performance metrics.

What are some key products in Black Duck Software's portfolio?

Black Duck's portfolio includes the Polaris SaaS Platform, Coverity Static Analysis, Black Duck Software Composition Analysis, WhiteHat Continuous Dynamic Analysis, and other security testing tools and services.

How many consecutive years has Black Duck been named a Leader in Gartner's Magic Quadrant for Application Security Testing?

Black Duck's portfolio has been named a Leader in the Gartner Magic Quadrant for Application Security Testing for seven consecutive years.