Kaseya has closed its mammoth purchase of fellow managed services leader Datto.
The IT and security management vendor announced the news on the final day of its 2022 Connect IT conference in Las Vegas.
As reported in April, when word of the pending acquisition first arrived, the deal was valued at $6.2 billion, representing a payout of $35.50 per share for Datto stock. Datto has ceased trading on the New York Stock Exchange, where it’s been listed since its IPO in October 2020.
Going forward, per plans articulated by Kaseya CEO Fred Voccola in multiple forums since April including an interview with ChannelPro, Datto will operate as a Kaseya business unit under its current name out of its current head office in Norwalk, Conn. That’s consistent with a pattern Kaseya established after earlier acquisitions of companies like Unitrends, IT Glue, and ID Agent, all of which continue to have independent brand identities.
Datto CEO Tim Weller, who played an instrumental role in engineering the sale to Kaseya, has left the company. “Tim has done an amazing job stewarding the business. He will continue advising me and the company and help me make sure we continue to deliver on that,” Voccola says.
Rob Rae, Datto’s senior vice president of business development, now leads the company, reporting to Voccola. Ryan Weeks, Datto’s chief information security officer, is remaining with the organization too.
“This is absolutely the best thing that could have happened to Datto, our employees and most importantly our MSP Partners,” said Rae in a press statement. “Datto has always been committed to building great technology and creating a culture where its MSPs customers always come first—and as part of Kaseya, we will be able to do this bigger, better, and at lower cost to the MSP.”
For Datto partners, Kaseya insists, today’s milestone heralds tighter workflow connections to other products, accelerated product roadmaps, and reduced product outlays.
“As we promised when we announced our intent to buy Datto, customers are going to see investment in innovation and integrations go up and prices come down,” said Voccola in a media statement, echoing remarks he made earlier this week at Connect IT. “We are increasing our technical investment in our products to ensure that every one of them will be supported and integrated, with enhanced functionality. The end goal is to be the most affordable and best option on the market for our awesome customers.”
Near term benefits to Datto partners, Kaseya says, include at least 17 integrations between Datto products and the Kaseya platform within the first month. Voccola described one of those enhancements, between the live ticketing feature in Datto’s Autotask PSA solution and Kaseya’s IT Glue documentation platform, at Connect IT on Tuesday, and said that IT Glue’s automatic documentation backup feature will be integrated with Datto’s backup suite within 45 days of acquisition close.
Datto products will also be 100% “commercially integrated” with Kaseya’s within 120 days, meaning that partners will pay for them on the same bill and buy them through the same account manager.
The Datto acquisition has been a source of persistent apprehension among partners worried about its implications for products they rely on and relationships they prize since its unveiling. Voccola reiterated earlier this week that none of Datto’s solutions will be removed from market, despite overlaps with Kaseya offerings in the RMM, PSA, and BDR segments.
“Obviously, we’re not going to shut down the products. That’s why we bought them,” he told ChannelPro this week. As evidence he cites a little reported incident earlier this month in which Datto notified partners that it was discontinuing its line of network switches.
“The following business day, they recanted that. That’s because Kaseya is buying Datto and we’ve committed we are not only supporting all products, but we’re going to enhance the investment in all the products, and the networking line of Datto is mission critical to this deal,” Voccola says.
What the future holds for Datto’s contracts is less certain. Many Datto partners worry about being pushed into the three-year deals that many Kaseya partners now hold. Voccola, for his part, insists that Datto’s present-day contract terms are essentially identical to Kaseya’s, with the primary difference being the scale of the discount that partners get in return for a longer commitment.
The end of Datto’s status as an independent entity represents the climax of a remarkable journey. The company was founded in 2017 by Austin McChord, an undergraduate at the Rochester Institute of Technology, who vowed to anyone willing to listen that he would someday sell the company for $1 billion. Just 10 years later, private equity investor Vista Equity Partners purchased Datto for a sum rumored to exceed that amount and merged it with PSA vendor Autotask. Three years after that, following the company’s IPO, Datto had a market capitalization of more than $4.2 billion. Its leadership, employees, and partners added $2 billion to that valuation in just 20 months.
The speed with which Kaseya finalized the Datto transaction, despite its size, suggests a relatively smooth process. Back in April, Kaseya said the deal would close in the second half of the year. In the end, it took just 73 days.