Cloud Software Group, the parent company of Citrix Systems, is considering selling its content-sharing platform ShareFile, according to sources cited by Bloomberg. This move is likely part of a broader strategy to streamline operations under its private equity ownership.

The company is reportedly working with a financial adviser to assess interest from potential buyers.

ShareFile, valued at an estimated$1.5 billion, offers document-sharing and collaboration software that integrates with popular apps like Microsoft Outlook.

Bloomberg sources, citing anonymity, suggest the platform might attract interest from private equity firms, though the discussions are in the early stages and may not translate into a sale.

The disinvestment of ShareFile is seen as a strategic move by Cloud Software Group to refocus on its core competencies.

"There are a couple of things which could drive this move," Neil Shah, VP for research and partner at Counterpoint Research said. "First, the cloud-driven enterprise content management systems space has seen significant growth and competition from established players from Box, and Dropbox to Microsoft's own SharePoint and OneDrive, as well as other strong contenders such as Egnyte, Kiteworks and Syncplicity."

Second, the sector has undergone major transformations with each technological shift, impacting leadership, IPOs, exits, mergers, and acquisitions. The evolution from the first wave of on-premises client-server architecture to the second wave of real-time cloud sync, and now to an emerging third wave driven by AI and automation with real-time intelligent collaboration, has reshaped the landscape and increased competition, said Shah.

Microsoft has been rapidly expanding its enterprise offerings with cloud services (Azure), AI tools (CoPilot), productivity tools (Office 365), and file management solutions (OneDrive, SharePoint), enabling unprecedented real-time collaboration.

"So, companies like ShareFile that are heavily dependent on or integrated with partners such as Microsoft, face increasing competition," Shah added. "ShareFile despite being one of the industry-leading solutions for more than a decade, the parent company is forced to evaluate ShareFile's strategic future capabilities, positioning, and value vs a formidable competition, and now would be a good time to spinoff and profit from the business when it is at peak."

Why sell ShareFile?

This reported spinoff move comes after Citrix was made private in a$13 billion deal by Elliott Investment Management and Vista Equity Partners in 2022. As part of the deal, Citrix and Tibco Software merged to form Cloud Software Group, the current parent company and inherited a wide range of products and services. Streamlining the portfolio could help Cloud Software Group optimize its operations and allocate its resources more efficiently.

However, the substantial debt burden from the leveraged buyout has demanded financial restructuring. Cloud Software Group has been actively managing its debt, recently pricing a$6.5 billion leveraged loan, the largest in the US this year, to refinance the expensive debt it incurred for the buyout.

The spinoff of ShareFile could be a step towards alleviating some of the financial pressures resulting from the expensive leveraged buyout, Shah reasoned.

Cloud Software Group, Vista Equity Partners, and Elliott Management have not yet responded to this report, Bloomberg said.