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Kaseya buys Datto – here’s my take

So, the big headline in the world of MSPs is that Kaseya is acquiring Datto.   With funding led by Insight Partners, who are back at the table after previous investing rounds in Kaseya.  The two companies will operate entirely independently until the deal is finalized, which is expected to close in the second half of 2022. 

Why do we care?

I saw a commentator say, “it’s not good news for anybody,” and one might think it’s mass chaos based on the buzz on social.

I’ll start with my standard advice here – nothing is different about these products today than was true yesterday.    Calm down.  

Let’s start with the financial motivations – I can tell you today that any shareholders in Datto just made 52%.     So, it’s good for them – and, mind you, anyone at Datto with stock coming as part of their compensation.    

Now, onto the investors – they think they can make more money here, as shocking, they have before.    For a sense, Insight Partners is doing deals regularly.     This is just Monday for them.  They’ve made 80 investments so far this year, and Crunchbase has them listed as currently at 859 investments – with 576 as the lead.       This one is big, but they have $46.1B in 11 funds.      These gamblers – and remember, they’re gambling – make money by taking these pools and putting them out there.  

The takeaway – is -that this is not a big deal for Insight.   It’s just not.     It’s Monday, and they’re even playing with an asset they know and like and have used before.   TechCrunch recently covered how they have a QUOTE “stunning $90B in assets under management”.     They aren’t even alone as the investors.     All about the financial play, people.     

This leads to the predictions – you won’t see any product changes in 2022.  Period.       They’ll go out of their way to keep things the same until the deal closes.  Once that happens, start a timer for 12 months of executive chaos.      As any student of M&A preaches, the problematic part is company cultures coming together.

Prediction – the Kaseya management team is dominant.   Insight likes them, has worked with them, and knows what they are getting.    

Product predictions are easy because, despite the noise of headline RMM overlap, there’s a lot that doesn’t overlap.     IT Glue, RapidFire Tools, Compliance Manager, Spanning Cloud Apps, ID Agent, Graphus, RocketCyber, and TruMethods, and then Datto Commerce, Wifi, Switches, and Edge Routers.      

IT Glue is so notable that they put it twice in the press release.    Well done, PR folks.  

Sure, there’s overlap on Backup with Datto’s suite and Unitrends.    That’s easy – everything survives.      Seriously, backup is so crowded that they’re not the only company with more than one solution.  

Two categories remain – PSA and RMM.   This is also easy to predict. 

On RMM, Kaseya’s VSA survives.    However, there won’t be any even discussion of sunsetting Datto RMM until 2024 or 2025.    If they’re clever, they’ll find a way to merge the two.  If not, they’ll offer price incentives to keep people around.  

On PSA, Autotask becomes dominant, but BMS and Vorex survive – and are positioned differently.     Again, no noise about pulling them together in 2022 or 2023.    

And a final piece of advice – for those who like your products… now is the time to lock things in.     Rather than freak out, you have two management teams highly motivated to keep you on the ranch.   Leverage that as far as you can go because retention is the name of the game for the leadership right now.     You have the most power you will have during this transition right now.

For those of you who don’t like the products, you have three options.  First, you can wait out the leadership changes while considering your options.   Second, you can leverage the inevitable flurry of competitive hawks that will swoop in.  Or third, consider the larger sense of where the market is going.    Look to my coverage of Microsoft and Apple, and I’ll tease a larger editorial I’m working on.     Because in all cases, there is absolutely no urgency.    From a business operations perspective, nothing changed.