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Autotask, Datto Merging In MSP-Centric Private Equity Deal

Autotask and Datto are merging, ChannelE2E has learned. The combined company will be an SMB technology pure play that offers cloud-centric data protection, backup, disaster recovery, networking equipment, RMM (remote monitoring and management) and PSA (professional services automation) for managed services providers, sources say.

Vista Equity Partners — Autotask’s parent — is acquiring Datto and merging the two technology companies, multiple sources close to the private equity industry say. An official announcement is expected as soon as Thursday, October 26, those third-party sources say.

> Related: All Autotask-Datto Merger News Coverage

Datto has been seeking a buyer for several months. The company hired Morgan Stanley to pursue potential suitors, source say, though ChannelE2E does not know if Morgan Stanley was involved in this deal.

Datto and Autotask: Who’s Leading?

Autotask CEO Mark Cattini

Datto CEO Austin McChord

Datto CEO Austin McChord

The combined Autotask-Datto company will be led by Datto’s executive team, some sources suggest — though we have not confirmed that detail.

According to a source familiar with the deal, ownership intends to ensure that all products remain open to third-party integrations because the MSP ecosystem as a whole only succeeds on truly open platforms. 

Still, the combined business is expected to compete against ConnectWise, Continuum, Kaseya and SolarWinds MSP, among several other MSP-centric technology companies. Watch for competition to also intensify in the MSP-centric data protection market, where rivals like AcronisBarracuda MSPeFolderInfrascaleStorageCraft and Veeam compete, among others.

Both Autotask and Datto are believed to be growing, and the businesses have minimal product overlap. The few areas of potential overlap include:

  • Autotask offers an endpoint backup service, but it hasn’t been a head-on alternative to Datto’s overall business continuity business.
  • Datto had offered a free file sync and sharing tool but I believe it’s no longer a product focus for the company. Autotask has its own file sync and sharing.

Integration Challenges?

Combining the two entities won’t be easy. The companies have separate cloud management systems. Moreover, Datto partners with multiple Autotask rivals, while Autotask partners with numerous Datto rivals. Maintaining those relationships could be a tricky tightrope walk, ChannelE2E believes. But here again, sources close to the deal insist the APIs and integrations across third-party platforms will remain in place.

Side note: Thoma Bravo owns both Continuum and SolarWinds MSP, but the two software companies are technically held in separate investment funds and there are no plans to merge those businesses, multiple sources have suggested in recent weeks.

ChannelE2E has reached out to Autotask and Datto for comment and we will update this blog continuously in the hours ahead. Keep checking back for details.

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30 Comments

Comments

    SuperDave:

    Holy Cow, Batman! This is crazy. Strange pairing. I guess an IPO for Datto is out of the question now.

      Joe Panettieri:

      SuperDave: I suspect the combined Autotask-Datto will remain private equity owned for three to five years, potentially pursuing a strategic sale or IPO sometime thereafter. Speculation on my part FWIW.
      -jp

    Charlie O'Hearn:

    My last two orders with Datto were very problematic. Could this be why?

      Austin McChord:

      I dont think so. If we messed something up please let me know! shoot me an email, austin@datto.com and I can try to sort things out for you.

        Jay Strickland:

        Sure is nice to see Austin taking the time to comment on a customer’s order issues on what is most likely a crazy day for him. Shows the priorities of the Datto team.

          Gerry Busardo:

          Agreed. Great leadership by example in terms of customer service, Austin! Hoping that this priority continues, especially for the potentially concerned ConnectWise+LabTech+Datto partners that will continue with their PSA/RMM platforms and hope for no future integration issues.

    Angelo:

    Wow this is very exciting! Great news for both companies! Being a business person I would love to see how this deal is structured. My guess is Datto’s executive team will be leading the charge and the insane growth rates will continue.

    Tom Fox:

    Very curious to hear Arnie’s comments on this!

      Joe Panettieri:

      Tom: We’ve reached out to all the key industry sources for comment. Stay tuned.
      -jp

    Tom clancy:

    Wow. Totally wow. Dattotask? Yes you can use the name. Just give me credit. And a free commlive ticket. Ha.

      Joe Panettieri:

      Registering URLs now…
      -jp

        Jay Tipton:

        Too late Joe. .com and .net both registered today.

    Jessica Davis:

    Two great companies! Exciting times!

    Truth B. Told:

    2 great companies? Have we already forgotten about the security fiasco at Datto’s datacenters?

    Joe Panettieri:

    Hi Folks: A polite reminder. We push readers to share their identities and link to their company affiliations. Constructive, fact-based criticism of any company (and criticism of me for that matter) is welcome part of a dialog here. Anonymous shots? Not so much.
    -jp

    Patrick Irwin:

    Change is always exciting and almost always confusing. It’s great to see Austin straightening out messed up orders, but how about some straight talk on: who is really in charge now?

    How integrated do the two products plan to become? How favorited will AT users be in engineering and pricing decisions? Will one sales team sell all products? If so, will partners feel pressure to switch RMMs? It’s probably easy to see the broad outlines of what’s in this for shareholders, but what’s in it for partners?

      Joe Panettieri:

      Patrick: Just a strong hunch but I would expect Datto-Autotask executives to make courtesy calls to coopetition. I would expect clear commitments to ongoing integrations with third-parties. I would then expect MSPs to hold Datto, Autotask and rivals responsible for maintaining said integrations.

      PS: Give Datto-Autotask some time to explain the news. Give rivals some time to digest the news. We’ll be sure to track the statements, promises and commitments — and the resulting outcomes (good, bad, indifferent, etc.).

      Best,
      -jp

      Patrick Irwin:

      Ok, fair enough, Joe, I am a free agent and a general channel advocate, but I do pitch for eFolder regularly. I ask those guys tough questions too, though. (Just ask them!)

    no name:

    The Datto owners will make a killing from this sale Will the employees benefit from the sale?

    Darren Cerullo:

    This is truly sad & simply terrible news.

    Amy Katz:

    Hi folks. The official announcement was made after 11:00am ET. Full press release is here: http://ow.ly/PJNZ30g9dRl
    Stay tuned for ChannelE2E’s analysis which will surface soon right here…

    eFolder:

    mmmkay

    Kevin Nejad:

    What’s next? Well, this marriage will give birth to a child who specializes in security. That’s the natural path. It’s the missing card to have the royal flush. The Cyber Security Company.

      Joe Panettieri:

      Kevin: Absolutely… Agreed!

      ChannelE2E says exactly that in this related coverage about the deal.
      -jp

    Jeff Weinman:

    Interesting there is an upcoming small price increase across Autotasks product line that we were notified about a few weeks back. Makes me wonder…

      Joe Panettieri:

      Jeff: Generally speaking I don’t think any recent pricing tweaks are related to the M&A deal. Datto and Autotask won’t become one company until sometime later in Q4. I think the sales motions at each company remain independent of each other…
      -jp

    Vince Tinnirello:

    This is a merger of two great companies who have strengths in different t places. It will be interesting to see if the datto name stays intact long term. Autotask has its own strong brand, culture, and management team. They have a ton of passionate and talented people just like Datto. Datto makes the best BDR products out there, and they compliment the Autotask product set very well. I’ve seen a lot of misguided posts today about PE. Vista is doing right by partners here. Autotask and Datto are strong on their own, but merging the two gives partners an incredible partner and platform to operate from. I’m excited to see what a dream team of people from two great companies will produce.

      Joe Panettieri:

      Vince: Thanks for weighing in. I know the IT services marketplace strongly respects your opinions. From where I sit, I don’t see Private Equity, Venture Capital or M&A as evil or good. I think readers should analyze each deal on its own merits — while also holding ownership accountable for properly supporting customers.

      PS: Beyond that, I promise not to piggyback what you said (heh!).
      -jp

    Michael Buckner:

    I’ve been a committed Datto partner for years. This year we were about to start a major push marketing Datto as a Data Security AND Systems recovery product. BUT we left Autotask years ago for many reasons, have had friendly MSP firms attempt to persuade us to go to Connectwise for years. Instead we’ve been going our own APP/Cloud meld. Our problem is that Continuum is the core of our RMM and Portal operations tool for just as many years. Datto had a virtue for us as kind of agnostic to all these solutions. Now I can just hear the push from Datto Sales about these other products from Autotask. AND what about my favorite annual event, Dattocon!!! I love it! For the past two years it’s been the place to hear about Austin’s vision with Mesh purchase, Backupify, etc. But now we are going to hear how we should all be seamless with Datto portal and Dashboards? No Continuum, No Connectwise, No Webroot, No……. I’m worried. Not sure if I should start our planned marketing campaign now.

    But why do they say Datto has been bought, when it is a VE deal, and Austin will head the new company?

      Joe Panettieri:

      Hey Michael: A few thoughts…

      1. Datto Sales Pushing Autotask Products?: Of course that will happen in one form or another. However keep in mind: Datto simply cannot afford to alienate the rest of the IT monitoring market (ConnectWise, Continuum, Kaseya, SolarWinds MSP, etc.). Doing so would force some ConnectWise, Continuum, Kaseya & SolarWinds customers to seriously rethink their BDR platforms. In other words, the Autotask-Datto deal will backfire if the combined company alienates those integrations and those who run them.

      2. What Autotask, Datto say: Autotask VP Pat Burns on Thursday told me at great length how the company will continue to work harder on third-party integrations. Of course, partners (and the media) should work to make sure Autotask and Datto live up to those promises. But I also think Burns understands how much could be lost if third-party integrations and associated support aren’t top-notch.

      3. Why do they say Datto has been bought? Because that’s exactly what happened. A private equity firm acquired majority control of Datto. Pretty straightforward. That private equity firm already owned Autotask, and is essentially merging Autotask into Datto. I don’t believe the companies have announced an official post-merger name. If I had to guess the company will be named Datto, with the Autotask offerings at sub-brands.

      Thanks for taking the time to read ChannelE2E and for the comment.
      -jp

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