Content, MSP

Kaseya’s Next MSP Software Business Moves

Fred Voccola, CEO, Kaseya
Fred Voccola, CEO, Kaseya

Kaseya is rallying MSPs this week at the Connect IT Global 2021 conference -- which blends in-person content in Las Vegas with virtual components as well. In total, the physical and virtual event is expected to attract roughly 3,000 people, the company says.

So what exactly should MSPs expect from Kaseya CEO Fred Voccola, executive team members and key technology partners? Check the blog below throughout the week for ChannelE2E's perspectives, Kaseya news updates and more.

Note: Blog originally published October 19, 2021. Updated regularly thereafter. 

11. MSP Payment Solutions: ConnectBooster has introduced Secure Payments, which "allows IT services professionals to quickly evaluate and address the security, compliance, and optimization of their clients’ payment landscapes."

10. Interview - Kaseya CEO Fred Voccola: ChannelE2E's October 20, 2021, conversation with Voccola focused on three areas: (1) The state of the MSP market, (2) The state of Kaseya and (3) The state of Kaseya's ownership. To paraphrase...

  • The state of the MSP market: Voccola said leading MSPs can continue to grow indefinitely because (A) the market is so highly fragmented, (B) there are always additional SMB customers to engage and (C) private equity views MSPs as a lower-cost investment compared to SaaS companies.
  • The state of Kaseya: The company delivered strong Q3 2021 financial performance despite the July ransomware attack.
  • The state of Kaseya's ownership: Kaseya is still owned by private equity backers -- including Insight Partners and TPG. In 2020, Kaseya had been exploring an IPO for 2021, but the ransomware attack slightly pushed back those plans. Now, Kaseya can potentially be publicly held by around Q2 of 2022, Voccola said. Still, there are numerous variables that could influence Kaseya's ownership model in the months ahead.

That's a very high-level recap of the conversation. We'll share a more extensive recap in the days ahead.

Jospeh Landes, CRO, Nerdio

9. How to Build Virtual Desktop Practices: Nerdio is tackling that question for MSPs at the conference, and helping MSPs to build virtual desktop practices on Microsoft Azure Virtual Desktop and the new Windows 365 service. "We continue to get lots of questions about Windows 365, and MSPs are starting to understand the importance of leaving the on-premises world and move to the cloud," Nerdio Chief Revenue Officer Joseph Landes told ChannelE2E over email.

8. Kaseya's MSP Software Suite: Before we explore the latest Kaseya product enhancements (see item 7 below) here's some context on the overall company product suite for MSPs and IT professionals. The portfolio includes:

7. Kaseya Product Enhancements: Now that you have a snapshot of Kaseya's overall product portfolio (see item 8 above), here are the specific Kaseya product enhancements that surfaced at the conference. They include...

  • IT Glue Enhancements:
    • IP Access Control in IT Glue, which allows technicians to restrict IT Glue access to specific IP addresses
    • Security Checklist Templates in IT Glue to help technicians secure IT Glue.
  • RapidFire Tools:
    • Look for details about the new VulScan Portable Vulnerability Scanner (PVS).
    • RapidFire Tools Network Detective Pro now supports Azure Infrastructure Discovery and Reports.
  • Graphus Email Security: MSP administrators can now save time by managing and configuring settings for end customers from a central location with just a few clicks, Kaseya said.
  • Spanning Backup for Salesforce: Can now automatically repair lookup relationships when records are restored.
  • myITdashboard and myITprocess: Now feature new integrations and capabilities with BMS.
  • Unitrends: Now features Endpoint Backup Alarm and Monitoring Integration with VSA.

Jim Lippie, CEO, SaaS Alerts

6. MSP Documentation Software - IT Glue Security: SaaS Alerts, an independent software startup led by CEO Jim Lippie, has introduced new security capabilities that allow MSPs to monitor the user behavior associated with their instances of IT Glue. Kaseya owns IT Glue, a popular MSP documentation software platform.

Kaseya Connect IT Global 2021: Pre-Conference Perspectives From ChannelE2E

Ahead of the event, we ChannelE2E shared the following perspectives...

5. State of MSP M&A: Voccola will share the latest stats and some predictions about MSP M&A. Among the anecdotes to note ahead of the event:

  • ChannelE2E has tracked roughly 650 M&A deals so far in 2021.
  • Dozens of private equity firms remain active in the MSP market, with more moving in each month.
  • Valuations have skyrocketed from a norm of about 5X to 8X EBITDA to all-time highs, according to our background conversations with MSPs and private equity firms. ChannelE2E is aware of two major M&A deals this year that had valuations of 18X EBITDA or above.

Still, ChannelE2E does not believe such lofty MSP M&A valuations can continue. At some point -- as interest rates rise -- the cost of borrowing to finance M&A deals will also rise -- forcing buyers to make offers that are more in line with historical norms. The wildcard? Nobody knows when that shift to valuation normalcy will arrive, or whether the MSP market will suffer some sort of dramatic valuation correction along the way...

... Those are our thoughts. We'll ping Voccola for his thoughts and perspectives when we talk.

Jason Manar, CISO, Kaseya

4. Kaseya Hires CISO: Kaseya has hired FBI veteran Jason Manar as CISO. The hire comes after Kaseya suffered a ransomware attack in July 2021 (see item 3 below). Manar most recently was Assistant Special Agent in Charge for the FBI, overseeing all cyber, counterintelligence, intelligence and the language service programs for the San Diego office. Manar will oversee information security and compliance for Kaseya.

The key takeaway: Yes, Manar is deeply familiar with the attack that hit Kaseya in July 2021. But that's not all. During the event, Manar will present “An FBI Agent’s View of the Evolving Threat Landscape,” with key takeaways from his 16 years as a federal agent.

3. After the Ransomware Attack - Key Learnings?: The REvil Ransomware attack against Kaseya VSA in July 2021 certainly dominated mid-year headlines. The attack spread to roughly 50 MSPs and 1,500 downstream customers. When chatter about the attack began to quiet down, word spread that the FBI had sat on the decryption key for a few weeks -- a realization that added insult to injury for some MSPs.

Dana Liedholm, senior VP, corporate marketing, Kaseya

Still, Kaseya for the most part ran effective crisis communications amid the attack and its aftermath. While Voccola spoke with U.S. government leaders and major business press, Senior VP Dana Liedholm remained both proactive and responsive to industry media throughout the recovery process.

Fast forward to present day and ChannelE2E wonders:

  • What were Kaseya's key learnings from the attack and resulting investigation?
  • Has the company adjusted its software development processes post-attack?
  • Beyond hiring Jason Manar as CISO (see item 4 above), has the company adjusted its executive team organization, reporting structures and/or responsibilities to address cybersecurity, information security and risk mitigation?

We'll pursue answers to those questions this week.

2. M&A Speculation -- Will the Big Four Ever Become the Big Three?: Within the MSP software market, Kaseya's head-on competition most frequently involves ConnectWise, Datto and N-able. From time to time, rumors pop up that the Big Four could become the Big Three amid a potential M&A deal involving two of the firms. But which two -- and when? (Side note: We realize players like Atera, Barracuda, NinjaRMM, Syncro and, among others, have also gained momentum in the market.)

I'm generally skeptical of the Big Four/Big Three M&A speculation, since the resulting combination would likely trigger product overlap. Still, I'll ask Voccola for his thoughts about if or how the industry may potentially consolidate.

1. What Is Kaseya's Financial Plan (Potential IPO?): Voccola in September 2020 said Kaseya expected to be a public company by roughly September 2021. Fast forward to current day, and Kaseya is still owned by private equity firm Insight Partners -- which acquired Kaseya in 2013. Then, TPG joined as a Kaseya investor in 2019.

The key current-day question: Did the ransomware attack impact Kaseya's financial performance; and/or IPO plan; or any associated timing? The short answer, I believe, involves the following:

  • Although RMM sales felt some pressure in the immediate aftermath of the attack, Kaseya has a diverse business that performed well in Q3 2021, sources close to the company tell ChannelE2E.
  • Rather than IPO, sources close to the company have long expected Kaseya will pursue a potential recapitalization in the private equity market sometime between now and Q1 of 2022. That's been my own speculation as well.

Admittedly, my financial speculation above is unconfirmed. But we'll strive to get some updates on Kaseya's financial plan from Voccola this week.

More Conference News: Got news to share from the Kaseya Connect IT conference? Email me the details and we'll potentially mention them in the blog above.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.