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Kaseya and Datto tie-up will put pressure on rivals

Initial responses to multi-billion-dollar deal is to talk up the MSP market as a whole and focus on existing strategies

Kaseya’s move to snap up fellow managed services technology specialist Datto for $6.2bn will inevitably put pressure on rival players in the market.

The deal was announced yesterday with Fred Voccola, Kaseya’s CEO, promising managed service providers (MSPs) that they will see benefits from the move, including “more functional, innovative and integrated solutions”.

He added: “The alignment of our missions and focus makes us a natural fit, which will help our greatly appreciated customers reach new levels of success. Kaseya is known for our outstanding track record of retaining the brands and cultures of the companies we acquire and supercharging product quality. Kaseya and Datto will be better together to serve our customers.”

Tim Weller, CEO of Datto, was also upbeat about the tie-up, saying: “Datto has always been committed to creating world-class technology for SMEs and delivering it through our global network of MSPs to align our growth with the channel. Combining with Kaseya brings together a broader array of technology products to create additional opportunities for MSPs.

“I am encouraged by the continued investment in the rapidly expanding global MSP community, and this transaction is another important validation of the channel.”

It was not that long ago that Weller was ringing the bell when Datto went public and positioned itself as one of the leading players in the MSP tools and services space.

The reaction to the deal from competitors has started to trickle out, with the initial response appearing to focus on the boost it will give the MSP market as a whole, with a billion-dollar deal underlining just how valuable firms in this market have become.

“The news that both companies have been searching for a change has been public for some time, so this announcement was not a surprise,” said John Pagliuca, CEO at N-able. “We believe that a transaction of this magnitude is a clear validation of the value and power of this industry to serve the large and growing SME IT market.”

But Pagliuca also had some words of warning for those expecting the consolidation of the two businesses to go smoothly. “It’s also a calculated disruption undertaken by both Kaseya and Datto, where they obviously felt that this would net out to a positive outcome for their stakeholders,” he said. “Transactions like this typically bring substantial challenges, such as successfully combining two different cultures and realising potential synergies.”

Pagliuca said N-able would remain focused on its strategy to support the MSP community and this merger of rivals did not disrupt that. “The rules of the game aren’t changing,” he added. “When your people and partners are successful, the business is successful.”

If it gets the necessary green lights, the Kaseya deal should close in the second half of the year. Datto plans to publish its first-quarter financial results in May, but understandably will not accompany them with an investor conference call.

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