Kaseya’s $6.2 billion acquisition of Datto creates a new MSP platform leader and in the process puts pressure on rival ConnectWise to up its game, said MSPs.
“This deal topples ConnectWise as the king of the hill of the MSP market,” said David Stinner, CEO of US itek, a Buffalo, N.Y.-based MSP that uses both ConnectWise and Kaseya software in supporting nearly 2,000 small-business users. “This has the same kind of impact on the market as when Tech Data bought Synnex and became the No. 1 distributor. Kaseya is now No. 1 with its acquisition of Datto.”
Stinner, who has been a ConnectWise customer for the past 12 years and a Kaseya customer for the past seven years, said he hopes the deal puts pressure on ConnectWise to build stronger relationships in the sales trenches with MSPs.
“I am a ConnectWise partner, and I am not happy with ConnectWise post-private-equity-acquisition [by Thoma Bravo in 2019],” said Stinner. “They continue to give lip service to doing better and they continue to anger MSPs because they don’t put customer service first.”
Case in point: Stinner said he added two new ConnectWise licenses in February and it took him a month to get it signed off on by Connectwise. In April, he added two more licenses and it took a week for ConnectWise to follow through.https://5a8520f4dbaf3ea844732318fbf1465d.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html
In contrast, Stinner said, Kaseya recently provided him withn a new account manager who is extremely “helpful, empathetic and goal-oriented.”
Kaseya and Datto would not comment beyond the press release. ConnectWise provided a statement from CEO Jason Magee that read:
“This changes nothing about ConnectWise’s plans or focus. We intend to support our partners by staying laser-focused on previously communicated plans and commitments to TSPs. With our Asio platform coming to life at hyperscale speed, the momentum for our new ConnectWise RMM solution, and the many other advancements on the horizon for the TSP community—from product to partner experience to business transformation offerings—we couldn’t be more bullish about the ConnectWise value proposition and our trajectory as a leader in this space. Kaseya and Datto are just beginning a lengthy integration journey. We are here to help the community in any way we can and look forward to seeing everyone at IT Nation Secure in June.”
[RELATED: Kaseya To Acquire Datto For $6.2B ]
Meanwhile, the deal between Kaseya and Datto—which is expected to close in the second half of 2022—creates an MSP behemoth that combines the 40,000 organizations that use Kaseya software with Datto’s 18,500 MSP partners. With both companies at about 1,700 employees, the new combined company will have 3,400 employees.
Under the terms of the deal, Datto stockholders will receive $35.50 per share. The deal is being funded by an equity consortium led by private equity behemoth Insight Partners, which has $90 billion in assets under management, with investments from TPG, Temasek and Sixth Street.
Kaseya is much more focused than ConnectWise on building strong relationships with MSPs, said Stinner. “If ConnectWise continues to give lip service to MSPs and doesn’t back up their software platform with the right results and customer service, then me and hundreds of MSPs are going to use this merger to switch to Kaseya and Datto,” he said. “I am hopeful that this deal will shake up ConnectWise enough that they will actually make changes in the organization.”
Kaseya upped its game in the wake of a cybersecurity breach in 2021 and became a much better company after that breach by listening to their customers and making the right changes, said Stinner.
“Kaseya has been doing a good job with customer service since that breach,” he said. “ConnectWise, however, continues to have customer service issues. They need to make customer service changes. I haven’t made a change to another MSP platform because of the difficulty in changing integrations to a new platform. But I can only be abused for so long before I do it.”
A top MSP industry executive, who did not want to be identified, agreed that the blockbuster Kaseya-Datto deal puts the heat on ConnectWise.
“I wouldn‘t want to be ConnectWise right now,” said the CEO, who did not want to be identified for fear of alienating ConnectWise. “By buying Datto, Kaseya has just become the leader in the MSP market. Kaseya just played their ace card in the MSP card game. You’ve got to hand it to Kaseya, that is a heck of a card to play.”
The problem for ConnectWise and other MSP platform vendors is a deal like this opens the door for MSPs to switch platform providers, said the CEO. “Whenever there is a deal like this, MSPs reassess their partnerships and look at making changes,” he said.
Furthermore, the CEO said, he expects more consolidation in the MSP market given the Kaseya-Datto deal. “There already was a buying frenzy in the MSP market; this is going to result in even more M&A in the market going forward,” he said.
Marc Harrison, president of Silicon East, Morganville, N.J., said his company has been using Datto for many years and he hopes Kaseya will not make changes that hurt his business.
“We do a lot of business with Datto and hopefully nothing changes,” Harrison said. “If Kaseya starts tinkering with them, I’d have a lot of concern. If it’s not broken, don’t fix it.”
Harrison said he is worried about consolidation in the MSP industry having a negative impact, particularly with private equity taking big stakes in MSP platform providers.
“At a high level, [consolidation] is probably not good,” he said. “These private equity firms are looking to wring money out of these companies by cutting costs. When things change, it’s generally not for the better. MSPs are very sensitive to changes and they have to be very careful there.”
Back to Top