New Relic Acquired by Francisco Partners and TPG for $6.5B

New Relic, a leading provider of observability and monitoring solutions, has announced that it will be acquired by private equity firms Francisco Partners and TPG for $6.5 billion. The deal is expected to close late 2023 or early 2024.

The deal represents a premium of approximately 40% over New Relic's closing price on July 29, the last trading day before the announcement. Upon completion of the acquisition, New Relic will operate as an independent company under its existing management team. The acquisition marks one of the largest deals in the technology industry this year and highlights the growing importance of observability and monitoring in the digital age.

Founded in 2008, New Relic went public on the New York Stock Exchange (NYSE) in 2014 and has been trading under the symbol NEWR. New Relic's platform allows customers to quickly detect and resolve issues, helping to reduce downtime costs. With the rise of cloud computing and DevOps practices, New Relic's solution has become increasingly popular among businesses looking to optimize their digital operations.

Casanova-Forrester

"Ever since our founding over 15 years ago, New Relic has created and delivered groundbreaking innovations, with a maniacal focus on delivering a leading observability platform to help our customers deliver better software faster," Lew Cirne, founder and executive chairman of the New Relic board, said in a statement. "We are pleased to partner with Francisco Partners and TPG, who are committed to continuing to build upon New Relic's strong foundation and achieve its full potential." 

Related:Observability vs. Monitoring: Who Needs Which When?

New Relic Has Grown Its IT Observability and AIOps Capabilities

Forrester analyst Carlos Casanova told ITPro Today that New Relic has been making significant improvements to its platform over the last three years.

In 2021, the New Relic One release helped consolidate the vendor's back end and unify the platform's discrete observability capabilities. Additionally, New Relic added cross-platform functionality to unite the benefits of its capabilities, providing engineers with an end-to-end experience including comprehensive digital experience management, he added.

Casanova said New Relic has provided strong automation capabilities and recently released a copilot-style capability called Grok for users of its platform.

New Relic Acquisition Is Part of a Larger Trend

Casanova sees the acquisition as being part of a larger trend that is occurring in 2023.

"We're seeing a new wave of vendor consolidation in the AIOps and observability market," he said.

Related:Applied Observability: Converting System Performance to Business Performance update from October 2022

Just this year, HPE acquired OpsRamp and Dell announced its intent to acquire Moogsoft, Casanova noted. Most recently, in May, Francisco Partners took Sumo Logic, another AIOps vendor, private. Francisco Partners now has multiple AIOps-, observability- and cloud-related technologies under its control. It also has a multitude of point solutions in security, testing, network management, and incident response, all of which enable and support the intent of AIOps and observability.

"It seems somewhat obvious that Francisco Partners has a big vision for this market with all these various and nicely aligned supporting technologies," Casanova said.