Content, MSP, Private equity

ConnectWise Acquires Continuum; MSP Land Grab Continues

ConnectWise has acquired Continuum and ITBoost. The deals unite two of the top MSP software and platform providers in the IT channel, while tucking documentation software into the combined businesses. ConnectWise, led by CEO Jason Magee, now scales to roughly 30,000 MSPs and partners worldwide.

ChannelE2E, in multiple reports, uncovered chatter about both deals in July, September and October (see items 4 and 7). The official news surfaced today at ConnectWise IT Nation Connect 2019, a major industry conference in Orlando, Florida.

Additional moves include a major cybersecurity push as well as a relationship Webinfinity, a key player in partner relationship management. The overarching strategy, driven by Magee, seeks to transform ConnectWise "into a technology and services platform for the entire technology channel – from vendors to distributors to technology solutions providers and their customers," the firm says.

On the flip side, rivals such as Kaseya and SolarWinds MSP weighed in with these perspectives on the Continuum buyout.

ConnectWise Acquires Continuum: One CEO Stays, One Exits

ConnectWise CEO Jason Magee will lead the combined company. Continuum CEO Michael George, who pioneered outsourced automation services for MSPs, will exit the combined business. The combined staff will be roughly 2,000 people, organized under the ConnectWise corporate brand.

Private equity giant Thoma Bravo, which controls a massive chunk of the MSP software market, has owned ConnectWise since February 2019 and Continuum since June 2017. However, the private equity firm did not dictate this deal, Magee tells ChannelE2E.

Instead, ConnectWise and Continuum found clear synergies between their IT automation and business management software, and outsourced automation services, Magee and George assert.

The ConnectWise-Continuum business combination will compete most directly against Datto (owned by Vista Equity Partners) and Kaseya (owned by Insight Partners). Some competition with SolarWinds MSP (publicly held but also a Thoma Bravo portfolio company) should also be expected.

ConnectWise Acquires Continuum: MSP Installed Base, Key Synergies

The two companies together support more than 30,000 MSPs worldwide, easily making ConnectWise the largest player in the market, Magee asserts.

Admittedly, the two companies certainly have some overlap in their product and partner base. But the potential synergies are also clear.

Continuum CEO Michael George
Continuum CEO Michael George
Jason Magee, CEO, ConnectWise

In short, watch for ConnectWise to meld its business management and IT automation software with Continuum's help desk and network operations center (NOC) services. Continuum's SOC and BDR (backup and disaster recovery) platforms will also play key roles going forward -- though Magee has vowed to keep the ConnectWise ecosystem open to software rivals.

ConnectWise Acquires Continuum: Key Software and Service Offerings

The ConnectWise software portfolio includes:

  • Sell: For sales quoting and proposal software.
  • Manage: For professional services automation or PSA -- which allows MSPs to manage their businesses.
  • Automate: For remote monitoring and management or RMM -- which allows MSPs to maintain customer systems.
  • Control: To remote control and troubleshoot customer systems.
  • Fortify: For security services.
  • The newly acquired ITBoost for MSP documentation.

The Continuum software and services portfolio includes:

  • Command: For RMM.
  • Recover: For backup, disaster recovery (BDR) and business continuity services.
  • Assist: A service rollup that leverages Continuum’s NOC, SOC and help desk services.
  • Enable: For MSP training, certification and sales coaching.

ConnectWise Acquires Continuum: Different Business Models

ConnectWise focuses mostly on software -- though the company also distributes third-party cloud and MSP options through an online store known as ConnectWise Marketplace.

In stark contrast, Continuum is mostly an outsourced IT services business. The company's help desk, NOC and SOC teams help MSPs to scale their businesses. Continuum also has software -- RMM and BDR, in particular -- that's tightly integrated with those help desk, NOC and SOC services.

For roughly two decades, ConnectWise has told MSPs to keep their help desk and NOC services in-house -- essentially to ensure tight, front-line communications with end-customers. Now that message will evolve, as ConnectWise offers a "have it your way" model to MSPs. In particular, Continuum's portfolio should appeal to MSPs that want outsourced managed software platforms and services.

ConnectWise Acquires Continuum: Product Overlap Considerations

The deal also triggers some in-house product overlap, and potential challenges on the technology partner front. For instance:

  • Remote Monitoring and Management (RMM) Software: Similar to how SolarWinds has balanced two RMM products following acquisitions, ConnectWise remains committed to both of its two RMM options, with some major R&D breakthroughs planned, Magee asserrts.
  • Backup and Disaster Recovery (BDR) Software: Continuum has a BDR platform, and ConnectWise has close BDR relationships with at least a half-dozen vendors. The Continuum option isn't considered an MSP market-share leader, ChanneLE2E believes, but it does have an "outsourced managed" model that a key sector of the MSP market craves. ConnectWise balances those third-party BDR relationships -- particularly Acronis, Axcient, Datto, Infrascale, Storage Guardian, StorageCraft and Veeam, among others. Again, ConnectWise plans to maintain an open ecosystem with third-party vendors, Magee says.
  • Security Operations Center (SOC) as a Service: ConnectWise has an investment in Perch Security, a SOCaaS and co-managed security provider. Continuum leverages third-party software (Netsurion and SentinelOne) in its worldwide SOCs. Also, Continuum's BrightGauge business intelligence software has emerged as the company's preferred security dashboard for MSPs. Here again, different use cases will appeal to different MSPs, though Magee concedes there's some overlap.
  • Remote Control: ConnectWise has Control while Continuum has had a a reseller/integration relationship with LogMeIn. I don't know the current status of that LogMeIn relationship.

ConnectWise Acquires Continuum: The Deal Clues

Rumors about a potential deal between the two companies have surfaced regularly throughout 2019. The key dates to know, according to ChannelE2E reporting, include:

More Deals Coming?

Roughly a month ago, a key industry executive asked me the following question: "If ConnectWise and Continuum merge, what's to stop Datto and Kaseya from merging?"

Admittedly, that's a highly speculative question. There's zero evidence that such a deal is coming. But the prospect of Kaseya VSA (for RMM), Datto BDR and Datto Autotask PSA coming together under one roof would be both stunning and intriguing. Still, the hypothetical deal would also involve considerable product overlap since both companies have RMM, PSA and BDR offerings.

Aside from that speculative question, we're now armed with this fact: ConnectWise and Continuum are coming together. The potential synergies are clear. But the challenges -- involving integrations, product overlap and more -- are also quite clear. We'll be tracking the company integrations closely.

Additional Considerations

ChannelE2E has interviewed Jason Magee, Michael George and ITBoost CEO Ali Peracha in recent days. Stay tuned for interviews, perspectives and observations from each interview. Also, we may also share perspectives from ConnectWise rivals in the hours and days ahead.

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.