

ThoughtWorks has been sold to private equity - phosphate
https://martinfowler.com/articles/201708-tw-sale.html
Several employees vouching the info of the record, no public links available yet.
======
Abishek_Muthian
Thoughtworks is unlike other IT services company I've seen. Their adoption of
latest programming paradigms and open source software is not generally seen
else where, because most clients like to stick with "What has been working for
everyone".

Also it's one of the few service oriented companies which actively focus on
developer relations. They have several developer/techie oriented programs in
every city they have a base.

e.g In my small city, Coimbatore; which even several Indians doesn't know it
exists has small Thoughtworks base which conduct monthly open event called
'Geek Night' focussing on geek stuff.

Here, the developer speaks about Clojure functional programming on how they
adapted it for their web application & the dwarf who follows that talk with
android customisation is actually me :D -
[https://www.youtube.com/watch?v=R-VUlDgJ6aA#t=02h05m08s](https://www.youtube.com/watch?v=R-VUlDgJ6aA#t=02h05m08s)

~~~
sidcool
This is true. There was a similar momentum around Scala. It's a tech first
company

------
obiefernandez
At least back in the early 2000s when I worked there, the expectation set by
Roy was that once the legal issues versus Schroder, et al [1] were settled,
that Thoughtworks would someday become a public trust. It would be very
surprising to learn that the company was now being sold for the profit of an
individual.

[1] [http://caselaw.findlaw.com/de-court-of-
chancery/1138774.html](http://caselaw.findlaw.com/de-court-of-
chancery/1138774.html)

~~~
obiefernandez
My sources say the number was 600 million.

~~~
twMandarin
That's true

~~~
ayr-ton
How could you confirm this?

------
hoodoof
Consulting firms are a strange thing... they build up a reputation for being
all about being the veryh best etc etc but in the end the work tends to be
just ordinary development work that you get sent in to do at some big company
or government department.

I guess it appeals to some but wouldn't be my choice of place to work.

~~~
einrealist
That's true. But many companies buy their services anyway. And that's often
because they did not made the transition to software-driven companies (the
"internal IT as a cost center" problem) and have trouble or don't even want to
hire people.

Having worked in the industry for years, I saw so many disfunctional companies
that I felt lucky to just be "the consultant".

~~~
mk89
...or because they don't trust their own developers/architects. It's
unbelievable that if a paid consultant tells you something, you tend to
believe him more than your own developer[s].

~~~
MrBuddyCasino
Then you haven't seen the general incompetence. It still surprises me how most
IT departments are run, and especially by whom.

~~~
gaius
_Then you haven 't seen the general incompetence._

Do you think consulting companies are any better? You should ask the NHS.

~~~
Swannie
Don't confuse outsourcing under the guise of consulting, with _real_
consulting.

~~~
MrBuddyCasino
I think the distinction has merit. There are low-quality shops, which
basically rent warm bodies, and then there are consultancies that actively
shape future, with the client.

ThoughtWorks qualifies for the latter.

------
Firegarden
You know as a programmer myself for the last 15 years I can see how the market
has changed and everything is becoming part of the global economy which means
the rates are a lot lower which means Ukraine and India are playing a bigger
and bigger role I could see private Equity trying to lower costs by
outsourcing.

I think there's a fundamental flaw in the idea that you can just pay for
cheaper labor- as Steve Jobs has said before the difference in a good
programmer and an outstanding programmer can be 50 to 1 or 100 to 1 you can't
capture that by trying to cut your cost from $100 an hour to $20 an hour.

Software inherently is one of the most scalable business models in the world
the cost of manufacturing is almost zero all of the cost is in the design they
should be able to make money. The mindset of being a consulting firm has to be
changed.

~~~
tyingq
Thoughtworks isn't cheap though. They sell the idea that outsourcing your work
to them is outsourcing to an elite team. They do have teams in Brazil, China,
etc, that are cheaper than their US based devs. But, those teams have rates
much higher to end clients than a typical outsourcing shop.

That's what has me curious here. A PE firm usually buys when they think they
see cost cutting opportunity. That may be hard to do with TW, since they pitch
and price themselves as "premium".

~~~
CoffeeDregs

        A PE firm usually buys when they think they see cost cutting opportunity.
    

The PE firm buys things in which it sees opportunity. Often-times, the
opportunity is to cut: the management team's adventurist streak in markets;
weak products; bloated staff.

Other times, they might recognize that a company needs capital to get bigger
faster in order to address an expanding market. In this case, I think the
thesis might be: cloud deployments and migrations are exploding; ThoughtWorks
has the thought leaders; "roll up" other consulting firms into ThoughtWorks;
dominate the market. A friend's consulting firm was just bought for this exact
reason. Something very similar happened to Pivotal.

~~~
mbesto
This. I work with PE firms every day and this is essentially how they operate.

Consulting has notoriously low multiples and so if you couple a consulting
business with a "computing/services" business you increase the multiple over
night.

I expect this page to expand drastically over the years:

[https://www.thoughtworks.com/products](https://www.thoughtworks.com/products)

~~~
CoffeeDregs
That's exactly what happened to Pivotal. Boutique consulting shop turned into
a consulting/services behemoth by strategic investments and business flow.

~~~
jacques_chester
> _That 's exactly what happened to Pivotal._

Disclosure: I work for Pivotal.

The original Pivotal _Labs_ was founded in 1989. Rob Mee sold to EMC in 2012.

A little later (circa 2013), EMC and VMWare took a number of teams and assets
(notably Labs, Cloud Foundry, Greenplum, Gemfire and Spring) and spun them out
into a new company, which was called Pivotal.

Pivotal is basically three divisions: Labs, Cloud R&D, Data.

Pivotal Labs is the consulting wing, there is a lot of cultural and conceptual
overlap with ThoughtWorks. The Labs division is the most recognisably direct
descendant of the original company Rob Mee founded. Its offerings and work
have broadened over time.

Cloud R&D is responsible for Cloud Foundry (including our commercial
distribution PivotalCF), KuBo, Spring, Pivotal Tracker and I always forget
something or someone.

Data is responsible for Greenplum and Gemfire and a number of related
technologies (eg HAWQ).

It's a complicated history, because nearly every part of Pivotal has a history
that predates Pivotal.

------
tyingq
Interesting. A company like ThoughtWorks doesn't seem to fit the typical
private equity playbook. Assuming that most of the employees, for example, are
assigned to consulting gigs at customer sites...you can't just start laying
people off. What would drastic cost cutting look like at ThoughtWorks?

Edit: Or maybe there are a lot of people "on the bench" or middle management
is overstaffed?

This discussion might be enlightening:
[https://news.ycombinator.com/item?id=12458683](https://news.ycombinator.com/item?id=12458683)

~~~
alphatwos
The cuttings will continue to happen (there has been a lot of layoffs) on the
operational team, with downsizing and cost-cutting. Fewer travels, less
expensive hotels, and luxurious meals. Also, the 'social justice' projects are
already halted.

~~~
snark42
>fewer travels, less expensive hotels, and luxurious meals.

Doesn't the customer typically pay all these costs for a consultant anyway?

~~~
nunez
Eats at your margins if expenses go over holdback, or the percentage of the
sale dedicated to travel.

------
jacknews
Well, I've heard of Martin Fowler, but not Roy Singham.

Let's face it, the company (and probably all companies) has really been built
by all it's people, not just a single founder/owner.

So who's now getting what of the $600 mil? A cursory search on Roy turns up
various phrases like "software socialist" etc, but honestly it would be hard
to justify that, or claim success in the "social responsibility" part of the
company's famous "3 pillars" values, if they're not even giving their own
people a fair stake.

~~~
endlessvoid94
Luckily, such things are not decided based upon cursory google searches.

~~~
jacknews
The founder could be Jesus Christ himself, I still don't think that would
justify owning the entirety of a company built by thousands.

~~~
sah2ed
If he dreamt up such a company as TW then proceeded to build it with his own
resources, without any outside funding, why shouldn't he be able to capture
most of the value he created by keeping the profits from the sale?

~~~
jacknews
So he did all the work? Or did his 3000-odd employees do some of it?

~~~
sah2ed
By your logic Mark Zuckerberg who became a billionaire before hiting 30
certainly doesn't deserve the bulk of his riches since there is no way he
could have done by himself, all the work thousands of engineers were hired to
do at Facebook.

I know you might want to say there is a fundamental difference between a
privately held TW and FB which took VC money early on, but I'm fairly
confident that if Zuck thought he could build FB without taking VC money, he'd
have gone that route, instead he went with dual-class shares as a reasonable
compromise to retaining control of his company.

~~~
jacknews
Yes that is exactly my logic, and no I don't want to say there's any
difference between TW and Zuckerberg - they do not deserve to own the entire
company, which has been built by all it's people.

------
nunez
I am surprised that they didn't sell to Accenture or IBM like I thought they
were going to. This sale was pretty much a given. (I worked there for a year.)

I'm pretty sure that TW will cut TWU (onboarding for new starters in India) or
scale it back massively, restart sales commissions, close a bunch of their
intl offices, cut nearly anything that doesn't make money and build their
India office super hard (body shop).

It's gonna be BAD.

~~~
twthrowaway
Yep, there's a ton of deadweight and high salaries in the sales team and
management team. Expect that talk of continuing with the same management team
to not be true.

~~~
nunez
Well, if you can believe it, the high salaries are still a discount compared
to the numbers that they _should_ be getting AND they are still pressured to
close just as much as they would if on commission.

Eg if a TW salesperson HAS to sell $20MM of work within that year but only
gets paid $300k/year (I doubt it's that high, but maybe), they are still
underpaid because most places would at least give them a few percentage points
of the margin, i.e. their entire TW salary...

~~~
billsix
> they are still pressured to close just as much as they would if on
> commission.

Then what is the value of being uncommissioned, except for virtue-signalling?

[https://www.thoughtworks.com/news/zero-
commissions](https://www.thoughtworks.com/news/zero-commissions)

But yes, 300K is a discount lol

~~~
nunez
According to those I asked on the matter, it was to mitigate selling 'bad'
work. Which didn't really go away.

------
hinkley

        ... His death would trigger a tax event that we could not pay from our own resources, forcing a fire sale.
        Despite several years of effort, we haven't found a way that would preserve the company in its current form.
        This further encouraged him to sell when there is no tax bill hanging over our head.

------
edpichler
My short story with TW. Seven years ago, after several interviews, I was
invited to move and work to TW office in Porto Alegre (Brazil) I asked 2,5k
USD month, and they refused. It was a good salary at that time, I could live
comfortably and travel to my home once a month. I was not willing to accept
less.

I continue liking this company, but now I have my own small business so I
haven't applied anymore.

~~~
2017Dude
The point of being a middleman is to keep that fat margin. Also the usual "we
did not come to you country for cheap labor, we came to have access to a new
talent pool" lie.

------
abledon
Whatever they do, dear god I hope they keep publishing the Tech Radar. That
thing is so great to read.

~~~
billsix
I remember that "DSL"s kept continously increasing on their radar until their
chief scientist George RR Martin Fowler finally, finally released his book on
it after 7 years, and then it was gone off of the radar. No slow descent off
the radar, just gone baby gone.

~~~
dullgiulio
In his defence, "correlation is not causation", or even more aptly
"predictions are difficult, especially about the future."

~~~
billsix
Or, more simply, that he is surrounded by "yes men/women" aka Fowlbots.

------
TheMagicHorsey
The funniest thing about this whole transaction is that Neville Roy Singham
always talked a big game about socialism, Hugo Chavez, central planning, etc.

He's all about the government redistributing wealth. But when it comes to his
own wealth, instead of gifting the company to the workers who built it, he has
all kinds of excuses for why it needed to be sold to a private equity company.

It doesn't surprise me one bit. What individuals won't do voluntarily
themselves, they want the state to force others to do.

Neville isn't offering to give a dividend distributing the sales profit to all
his workers. No no no ... he's going to use it himself for his charitable
works. Much like Hugo Chavez's succesor in Venezuela, Maduro, takes all the
resources of the country on the "behalf of the people" and distributes it
himself. I'm sure the prestige and power associated with being the distributor
is not a motivating factor at all.

~~~
throwawayTW
This is so true. I worked at TW, and I believe the only thing that made it
awesome was the people who worked there and the culture. Working there is a
career-changing experience and definitely improves you as a developer. But,
there was one thing that always stuck out to me. The 'false' reputation that
Roy built of himself as a socialist. Roy was never the socialist he claims to
be. As far as the 'social impact' projects are concerned, TW used to provide
discounted rates for most of these projects. But, given the premium rate, I
wouldn't call it social. It was just a sham to make the employees buy into
this social stuff. And, a lot of people did buy into it. Except those who
carefully heard Roy at the 'Away Days' and realized that he is just trying to
make more money by getting the government contracts (which have big money even
in India). All these social projects were a way to make money (very few
'social' projects were pro-bono). There's only one big 'social' pro-bono
project I know of. I think a big reason TW contributed to OpenMRS, was to get
big medical contracts from UNICEF, other charities and the governments.

Regarding the management, there is no doubt the company had a great
management, but this changed for the worse somewhere around 2011-14 at least
for India. The management at that time was the reason that the attrition rates
for TW spiked in India (and possibly in other regions as well). Otherwise,
people hardly used to ever leave TW, as it really was a great place to work
at. Not anymore and that's exactly because of the management, which decided to
kill the culture for profits. Regarding Roy, he is a guy who is pretty much as
socialist as the "socialist" dictators we have had - socialist as long as I
get to keep all the profits. TW never allotted any stock to the employees, and
Roy is a guy who built a totally private company in a capitalist country. And,
he thinks governments in South America are doing better. There is a good way
to implement socialist policies like some of the European countries have done,
and then there is all the crap that people in South America and Cuba have to
put up with in the name of socialism. As long as your socialism involves a
dictator and no checks, you can be sure it's going to be a hellish experience.

~~~
zabil
> There's only one big 'social' pro-bono project I know of. I think a big
> reason TW contributed to OpenMRS, was to get big medical contracts from
> UNICEF, other charities and the governments.

Strange, I ran this program (for the first two years) and there was no such
intention, at least when I was working on it. It was goodwill.

------
corpMaverick
Te me Martin Fowler has been branding of Thoughtworks. I am surprised he was
not an owner. I wonder if Martin will remain.

------
Analemma_
Pretty much the only things I know about ThoughtWorks I got from Zed Shaw's
Rails rant, which put them in a sharply negative light as a body shop of
mostly-useless people. Was that an accurate characterization or is there more
to them?

~~~
brepl
Got a link for this? The original seems to be gone.

~~~
brepl
[https://web.archive.org/web/20080103072111/http://www.zedsha...](https://web.archive.org/web/20080103072111/http://www.zedshaw.com/rants/rails_is_a_ghetto.html)

------
brepl
A few questions:

* What's the likely outcome for employees?

* Who was the previous owner?

* How much did it sell for?

* Are operations in specific regions likely to be shut down or sold off?

~~~
topeka2
According to sources, there will be no changes for employees. It was Neville
Roy Singham. Not informed. Everything was sold.

~~~
hinkley
Someone who puts that kind of money down to buy a company is going to want to
have a say in how it's run.

The second rule of buyouts is that everything will change in the second fiscal
year. They won't tell you NOT to do something, they just won't give you any
budget for it.

The first rule of buyouts is that the promises always come from someone who
isn't in a position to back them up (like the old owner, or your boss's boss,
who only have a single seat on the board between them).

------
clarkent
Presumably the PE value prop is that they charge over the odds for their
consultancy while paying their employees under market rate. If they can
maintain a public image of technical excellence and social responsibility for
a couple more years while the equity firm milks the profits, Apax get their
multiplier. At the end of that they can sell off what's left and doubles all
round.

Or am I getting cynical in my old age?

------
wifiji
[https://www.thoughtworks.com/news/apax](https://www.thoughtworks.com/news/apax)

------
brepl
What did ThoughtWorks do with their profits before they were bought? If it was
privately owned, does that mean the profits were dividended to the founder? Or
were they all re-invested in the company to fund expansion?

~~~
paul_h
Ex* Employee #500 here. All reinvested.

* [https://paulhammant.com/2015/01/06/farewell-2014-farewell-th...](https://paulhammant.com/2015/01/06/farewell-2014-farewell-thoughtworks/)

------
apapli
I can just hear the private equity firm claiming it's "business as usual".

My experience tells me when that phrase is uttered only a short time passes
before lots changes!

------
faitswulff
Does anyone know what Roy Singham's activism consists of?

~~~
sumedh
[http://therealnews.com/t2/index.php?option=com_content&task=...](http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=12301)

~~~
jraedisch
Sadly it's a video that I cannot watch right now. I googled a little and all I
found was the 2015 Freedom to Connect page: [http://freedom-to-
connect.net/](http://freedom-to-connect.net/).

So right now, based on the little information I have, I am considering
"activism" and "tax issues" as excuses to sell to the highest bidder.

~~~
cbtacy
Wow. "I googled a little and having now knowledge I've decided this is all BS
because I'm so damn smart."

------
elliotec
>>> Funds advised by Apax Partners (“Apax Funds”) have today announced a
definitive agreement to acquire ThoughtWorks, Inc.

What does that mean? It's not literally Apax buying the company, but "Funds
advised by Apax"... does that mean it's just the money that owns it, or child
companies, or some sort of fancy tax/legal structure?

~~~
antr
Private equity manages funds, on behalf of LPs. Just the same as most VC
funds. It's the same thing. Apax doesn't own the company, the fund does. Apax
gets fees for the deployed capital and carry if the investment, upon exit,
goes beyond a given return threshold.

------
frenchman_in_ny
Either way a sale / transfer of ownership triggers tax consequences.

Couldn't this have been done as an ESOP?

~~~
tyingq
It would have to produce enough actual cash to pay the tax bill. Roy
apparently owned 97%. Probably a 9 figure tax bill.

------
Havoc
> His death would trigger a tax event that we could not pay from our own
> resources, forcing a fire sale.

This just screams sht tax laws. Good tax laws don't wreck their major economic
contributors.

The sad thing is I knew this was an American company based on that line alone.

~~~
mbillie1
So... the estate tax is what you have a problem with?

~~~
humanrebar
_I_ have a problem with it. Destroying jobs because of tax implications of a
death is unacceptable.

------
worldwar
Really? I search in google and twitter, all related posts' sources point to
this page.

~~~
Garbage
[https://www.thoughtworks.com/news/apax](https://www.thoughtworks.com/news/apax)

------
desireco42
I was always saying that if I was younger, I wish company like ThoughtWorks
got me under it's wing, send me off to their Bootcamp/University,
indoctrinated me into right ways of doing things.

I had to learn same things, but much harder.

------
aryehof
I've always wondered what _design_ methodology does ThoughtWorks apply to most
business systems. Is it the same modeling of use-case driven data-based
design, as used by most outsourced development companies?

Edit: grammar

------
ttam
[https://www.pehub.com/2017/08/apax-to-buy-
thoughtworks/#](https://www.pehub.com/2017/08/apax-to-buy-thoughtworks/#)

------
chiph
Sounds like everyone knew that a sale event would happen one day - why did
they not focus on building a pile of cash that could be used to pay the taxes
(Martin implies a ~50% rate in his footnote).

------
bill899
Bought by Apax

------
vijayagrawal18
[https://www.thoughtworks.com/news/apax](https://www.thoughtworks.com/news/apax)

------
sidcool
What would it mean for the Devs, QAs etc of ThoughtWorks?

------
foxh0und
Recent CompSci grad, I went down the interview path with both TW and my
current employer, ended up cutting the TW process short as I decided to accept
the latters offer. This is very interesting.

------
vince16
How is it gonna impact the developers now?

------
sidcool
So it's official.

~~~
madorb
Quite so:
[https://www.thoughtworks.com/news/apax](https://www.thoughtworks.com/news/apax)

------
madorb
[https://martinfowler.com/articles/201708-tw-
sale.html](https://martinfowler.com/articles/201708-tw-sale.html)

~~~
dang
Thanks. We've put that URL above. (The submission originally had no URL.)

------
obiefernandez
And now the official story: [https://martinfowler.com/articles/201708-tw-
sale.html](https://martinfowler.com/articles/201708-tw-sale.html)

