In an announcement with market-shaking implications for the SMB channel generally and MSPs specifically, business continuity vendor Datto Inc. has been acquired by private investment firm Vista Equity Partners for an undisclosed sum and merged with Autotask Corp., the managed services software maker Vista purchased three years ago.
The blockbuster transaction, which is expected to close in the fourth quarter of 2017, results in the creation of a managed services software and hardware goliath with over 13,000 partners serving more than 500,000 SMBs in 125 countries, and an expansive product portfolio spanning from RMM and PSA applications to solutions for backup and disaster recovery, file sync and share, networking, power management, and cloud licensing.
The new, combined business will operate under the Datto brand. Austin McChord, Norwalk, Conn.-based Datto’s CEO, will serve the new company in the same capacity. Mark Cattini, East Greenbush, N.Y.-based Autotask’s president and CEO, will work as a strategic advisor to the board of directors.
The new Datto will be an instant kingpin in a managed services market projected to generate $1 trillion in global SMB spending by 2021, according to AMI-Partners.
Bringing Autotask and Datto under a common roof will benefit both vendors’ partners in tangible ways, according to Rob Rae, Datto’s vice president of business development, in an exclusive interview with ChannelPro.
“They’re very strong in some markets that we are not. We’re very strong in some markets that they’re not,” he says. “Bringing the full suite of products to the market is only going to be a huge benefit to our organization and the channel as a whole.”
Rae emphasizes that the Datto-Autotask merger will have no impact on either company’s alliance relationships with BDR and managed services software makers, or their product integration strategy.
“The key to this is still continuing the open ecosystem and continuing to work with all the other vendors out there,” he says. “That’s going be absolutely critical for us and something that we’re going to continue to do so that the MSPs ultimately just have more choice.”
Both Datto and Autotask have been expanding into new markets in recent years. Datto introduced a file sync and share solution in March of last year. More recently, in January of this year, the company announced that it had acquired Open Mesh Inc., a Lake Oswego, Ore.-based maker of Wi-Fi switches and 802.11ac access points, and launched an SMB networking solution. This June, Datto added a managed power strip to its offerings as well.
Autotask, meanwhile, drew on investment capital from Vista in September 2014 to move beyond its early base as a leader in PSA software by purchasing RMM vendor CentraStage. The company subsequently bought file sync and share vendor Soonr the following July, and utilized software acquired through that deal to enter the BDR market in September of last year. Reconciling the new Datto’s overlapping BDR and file sync and share holdings is one of many tasks ahead for McChord and his as yet unnamed leadership team.
Seeking to boost technician productivity, Autotask has been fusing its solutions into a single “unification platform” with a deeply integrated code base and interface since last April. According to Rae, Datto intends to pursue a similar strategy.
“For MSPs, having that single pane of glass to be able to manage all the technologies that they work with is critical to running a successful and profitable MSP business,” he says.
Though the now merged business is named Datto, the fate of the Autotask brand remains unsettled. Rae points to the way Datto has handled the Open Mesh name in the months since it acquired that company as a possible example, however.
“Almost a year later, we’re still offering both options to the channel and there’s no plans on ripping and replacing that or changing that out,” he says. “The Open Mesh strategy has been very successful and suggests that we’re more than likely going to do exactly the same thing.”
According to Rae, Datto will take a “slow and diligent” approach to that and other decisions in a bid to minimize disruption to its partners and Autotask’s.
“You’re probably not going to see any radical changes right out of the gate,” he says. “This is a very, very strategic move for two organizations that are still growing, so there’s no urgency in really changing the go-to-market strategy for either organization.”
As of this June, McChord remained open to taking Datto public. The privately held firm has been valued at $1 billion as recently as June by CB Insights, a New York-based research firm with expertise in technology startups.