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ConnectWise Acquires Continuum: MSP Software Rivals Respond

ConnectWise’s acquisition of Continuum, confirmed October 30, generated reaction from MSP (managed IT services provider) software and technology platform rivals such as Barracuda MSP, Datto, Kaseya and SolarWinds along with business software providers such as Harmony PSA.

Here are the latest viewpoints…

SolarWinds MSP GM John Pagliuca

John Pagliuca, executive VP and GM of SolarWinds MSP, offered perspectives on the acquisition and also tipped his hat to Continuum CEO Michael George, who is exiting the business amid the M&A deal. SolarWinds is publicly held but the company also has some private equity backing from Thoma Bravo — the firm that owns ConnectWise.

In a prepared statement, Pagliuca said:

“The MSP industry continues to see waves of consolidation both at the vendor and practitioner level, and today’s announcement doesn’t come with a lot of surprise. It’s a thriving industry and that’s why PE firms continue to invest. That’s good for the industry and it’s good for us. But you have to keep your eye on the ball and remember who the ultimate beneficiary should be – the MSP.

The truth is you can’t miss a beat. You need to be able to effectively incubate the new model and address any potential challenges it can bring, while still doing right by your customers, who we call partners. Our sole focus has always been first and foremost on our MSP partners; that’s how we’ve built our business and that isn’t going to change. We congratulate Continuum and ConnectWise and look forward to continued industry growth and development that ultimately benefits the MSP first and foremost – because in the end, if they grow, we grow.”

Continuum CEO Michael George

Shifting gears to the topic of Michael George’s exit, Pagliuca added:

“On a personal note, I want to offer all the best to Michael George as he continues his journey onto the next big thing. Many folks don’t know that when I took over this gig here at SolarWinds MSP, Michael was the first executive who reached out to me. Since then, we’ve continued to meet regularly to talk about our philosophies on management, leadership styles, and the pivotal things we’re seeing happen in the industry. I’ve come to see him as an important colleague and a friend, and I have a ton of respect for him. I know he isn’t done yet and I’m excited to see what he does next. I’ll definitely be following along.”

ConnectWise Acquires Continuum: Kaseya’s Perspectives

Kaseya CEO Fred Voccola

Kaseya CEO Fred Voccola also is weighing in on the deal. Voccola’s firm offers a suite of software that competes against ConnectWise and Continuum on multiple fronts. Voccola’s deal perspective: 

“It’s no surprise that Thoma Bravo would combine its Continuum and ConnectWise investments into a single company. It’s their best economic option. The massive consolidation in the MSP tools space continues as a result of the demand from MSPs for a single platform to meet all their technology needs. And while this one merger won’t fully fill this need for the market, it is validating to see other companies in this space follow what we’ve been doing with Kaseya IT Complete for the last four years.

Some hiccups are, of course, to be expected for a deal of this size. For example, both ConnectWise and Continuum are relatively the same size and offer users competing RMMs. And while they, in theory, could continue maintaining two RMMs simultaneously, they’ll likely focus instead on investing in just one tool’s continued R&D, technical support and customer enablement. This will ultimately force half of its users to migrate to the company’s preferred tool – an often costly and time-consuming effort.

Despite the potential setbacks, the deal is great from an industry perspective, because it shows that companies with serious, institutional money – like Insight and TPG with Kaseya or Thoma with Continuum and ConnectWise – are continuing to invest in this market. So it’s an exciting time to be part of this industry that is growing and to continue having others following our lead to provide MSPs with a quality, unified platform that is capable of meeting all their needs.”

ConnectWise Acquires Continuum: Barracuda’s Perspectives

Barracuda, meanwhile, is best known in the security market but also has backup and RMM (remote monitoring and management) software in the MSP sector. Barracuda, like ConnectWise, is owned by Thoma Bravo.

Brian Babineau, SVP and GM of managed services providers at Barracuda

Brian Babineau, SVP and GM of managed services providers at Barracuda, stated:

“Security has been a massive change catalyst for the MSP marketplace – the dynamic threat environment has challenged MSPs to evolve their offerings and skill sets, while at the same time driving vendors to expand their security offerings beyond anti-virus. Most of this expansion has come in the form of M&A versus organized R&D. More specifically, most of the MSP supplier consolidation has centered on larger tool providers buying smaller, emerging security vendors. This really highlights how hard it is to truly innovate and sustain information security intellectual property. At Barracuda, we have taken a bit of a different approach in applying our battled-tested security offerings to critical MSP operational tools, and it turns out that having a heritage in security matters a whole lot to MSPs who are just getting into it.

Both Connectwise and Continuum are just getting started in security. This combination gives them an opportunity to scale their overall business. Scaling a security-centric portfolio on the other hand is a different beast. Many will say how consolidation is great because it provides the proverbial one throat to choke; I see it differently in that it will drive competitive R&D which ultimately leads to better products.”

ConnectWise Acquires Continuum: Harmony PSA’s Perspectives

Harmony PSA CEO Steve Duckworth

Steve Duckworth, founder and CEO of Harmony PSA, offered this perspective:

“We wish all the individuals involved well, and hope this consolidation doesn’t result in a departure of talent, as has happened with other acquisitions. For Thoma Bravo, rolling up assets to achieve a higher tier multiplier makes perfect sense. What makes less sense is how this consolidation and associated rationalization will actively benefit both company’s partners. Time and again we see innovative businesses being acquired and consolidated, generally at the expense of innovation and competitive advantage. We’ll wait to see whether the cost savings ConnectWise will drive out translates into partner benefits or increased margins. In the meantime, we’ll continue on our innovation path that serves our partners and their customers.”

ConnectWise Acquires Continuum: Datto’s Perspectives

Datto CTO Robert Petrocelli

Datto, meanwhile, weighed in on the deal without mentioning ConnectWise or Continuum by name. Indeed, Datto CTO Bob Petrocelli penned this blog and offered this concise conclusion:

“Because every acquisition and merger is different, the only reliable rule of thumb is to exercise caution, especially when considering new investments in the acquired company’s technology stack. My best advice – stick with what works for your business until promised synergies are proven.”

This blog originally published October 30. Updated November 1 with perspectives from Datto, Barracuda and Harmony PSA.

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3 Comments

Comments

    Jason Nelson:

    Great reporting, Joe. The consolidation certainly won’t stop here and I’m curious to see what the other players do in response, if anything. I get the sense that enough eyebrows were raised after this announcement that, bottom line, the proof for most will be in the proverbial pudding. I have no doubts RE ConnectWise having the willpower and culture needed to execute on this. The only question I have is, what is the actual plan to integrate two companies with such different missions?

    Joe Panettieri:

    Hey Jason: Thanks for your note and readership. We will be sure to do follow-up reporting as the organizations come together — focusing on key items such as executive & management roles, business strategy, product roadmaps, target milestones, etc. Stay tuned and thanks again.
    -jp

    Tina Kempf:

    Hey Joe, thanks for everything. It’s an exciting time to be in the MSP business. I am definitely interested in the business strategy, product roadmaps, target milestones, follow ups that you have planned.

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