Investors To Acquire Datto, Merge It with Autotask To Form MSP Powerhouse

Investment firm Vista Equity Partners shook up the managed service provider (MSP) market on Thursday by announcing an agreement to acquire Datto and to combine that data protection specialist company with another of its holdings, MSP tools vendor Autotask Corp.

Assuming the deal closes as expected by the end of this year, it will create a powerhouse MSP tools company with offerings ranging from backup and disaster recovery (BDR) to remote monitoring and management (RMM) to professional services automation (PSA), along with file sync and share and SMB networking. Datto founder and CEO Austin McChord will serve as CEO overseeing a combined management team, while Autotask President and CEO Mark Cattini will act as a strategic advisor to the board of directors. Branding for the combined company has not been determined.

"This unique combination of talent with a track record of success marks a new chapter that will make an even bigger impact for our managed service provider partners, by delivering an unprecedented set of capabilities for them to serve millions of small businesses in the future," McChord said in a statement. Terms of the deal were not disclosed, although Datto has previously been valued as a $1 billion company after securing $75 million in a Series B financing round two years ago.

Datto is based in Norwalk, Conn. Autotask, with headquarters in New York, was acquired by Vista Equity Partners in June 2014. Vista, which focuses on enterprise technology companies and has invested $30 billion since 2000, has offices in Austin, Texas; San Francisco and Chicago.

The companies did make public a few scale metrics, including that Datto-Autotask have a combined 13,000 providers/MSPs, 500,000 SMB customers and a geographic reach that covers 125 countries.

Cattini emphasized the future company's potential for creating integrations between the product lines and improve the products. "With the powerful combination of the Autotask Unified PSA-RMM platform and Datto's industry leading business continuity solutions, together we can now deliver unprecedented innovation and unmatched levels of value and service to our customers and partners worldwide," Cattini said in a statement.

Executives from both Datto and Autotask assured both MSPs and industry partners that the new company will continue to work openly with its competitors/partners to ensure that products are interoperable -- allowing MSPs to continue to mix and match among RMM, PSA and BDR tools.

"We're going to continue to have an open philosophy. That's worked well for Autotask in the past, and it's certainly worked well for Datto," said Patrick Burns, vice president of product management for Autotask, in an interview.

Citing BDR and file sharing competitor eFolder and PSA/RMM vendor ConnectWise as examples, Datto Chief Revenue Officer Brooks Borcherding elaborated on the interoperability philosophy: "Going forward we would certainly expect and encourage Autotask partners to continue on with an eFolder or for ourselves to continue to have a strong relationship with ConnectWise and all the importance of the integration and ease of use that come along with that because all the MSPs have their different needs and they're fulfilled better by one or a mix of those different services."

Borcherding and Burns both said that even as Datto-Autotask works in cooperation with industry partners, look for the Vista-backed entity to continue to add new elements to the stack via acquisition, as well as innovation, and to compete vigorously.

Outside of the Vista investment community, other industry figures confirmed the importance of the deal.

"The merger between Autotask and Datto signifies a major shift in the MSP vendor landscape," said Fred Voccola, CEO of Kaseya, in a statement.

"Investor-backed companies, like Datto/Autotask and Kaseya, will continue to acquire technologies that will help them bring more comprehensive solutions to benefit the greater MSP community. On the other hand, those without the necessary financial backing (like ConnectWise, TigerPaw, and others) will steadily lose ground as they are unable to invest in the products to help take their MSPs to the next level of growth," Voccola said. "Kaseya will continue to work harmoniously with Datto/Autotask to deepen the integration between our products and fully support our mutual customers who use VSA by Kaseya."

UPDATE: In a statement Thursday night, ConnectWise CEO Arnie Bellini offered congratulations but emphasized the internal tensions that Datto and Autotask will face in driving forward their own products while integrating with industry partners.

"Today's Datto/Autotask merger announcement is exactly what we expect to see in a rapidly expanding ecosystem," Bellini said. "ConnectWise's acquisition strategy is different. We are focused on building a completely integrated business platform for Technology Solution Providers of all kinds, including MSPs. We also believe in an open and connected ecosystem of choices. For example, ConnectWise currently offers our customers six different data protection solutions: Infrascale, Acronis, Storage Craft, Veeam, Centrestack and Storage Guardian. Those choices are important! It seems the new Datto/Autotask merger will offer a single data protection solution. That may not work out well for them. Regardless, we congratulate them and welcome the competition. It makes all of us better."

Posted by Scott Bekker on October 26, 2017