Content, MSP, Private equity

Kaseya-Datto M&A Timeline: Key Dates, What’s Next for MSP Partners

Credit: Kaseya

Kaseya's pending $6.2 billion acquisition of Datto, funded by private equity firm Insight Partners, is expected to close in the second half of 2022. The deal will create a massive software provider that assists MSPs with business automation, IT management, security and data protection capabilities.

But what's truly next -- especially in terms of Kaseya-Datto M&A deal milestones? Glad you asked. Here's a timeline of dates and developments for MSPs to note. Keep checking back for new dates and milestones.

November 2021 to April 10, 2022: The secret negotiations to buy Datto -- Who bid, how much and when.

April 11, 2022 - Kaseya announces agreement to acquire Datto:

  • Potential MSP Upside: The deal provides clear potential upside for MSPs that run Datto's data protection and PSA (professional services automation) software, and Kaseya's popular RMM (remote monitoring and management) software platforms.
  • Potential MSP Concerns: Some MSPs -- particularly some smaller service providers -- worry that the two corporate cultures won't blend, and that Datto's fanatical focus on MSP community could suffer. Also of concern: Some MSPs fret about Kaseya's licensing policies and support.
  • A Key Priority for Kaseya: Datto supports more than 18,500 MSPs -- and roughly 1,400 of those MSPs spend at least $100,000 in ARR (annual recurring revenue) with Datto, according to a February 2022 earnings report from the company. It's a safe bet Kaseya will work hard to retain and grow relations with those influential MSPs.

Week of April 19, 2022

  • Kaseya CEO Vows MSP Support: Kaseya CEO Fred Voccola -- through multiple media reports and during an appearance at Robin Robins' conference --  vowed to properly support the Datto partner base.
  • Big Antitrust Concerns? Not Really, But: Multiple sources check in with ChannelE2E, asking if the Kaseya-Datto deal will potentially trigger antitrust scrutiny from the U.S. Department of Justice. It's safe to expect the U.S. federal government to give the pending M&A deal a look. But we expect the deal to be approved.
  • ConnectBooster Chatter: Some MSPs have threatened to petition the government with complaints about licensing changes and price hikes involving  ConnectBooster -- a business that Kaseya allegedly owns. Still, Kaseya as of March 2022 said it had "no information to share" regarding ConnectBooster and that ownership rumor, ChannelE2E reported at the time.
  • Bottom Line: Again, ChannelE2E suspects the federal government will give the Kaseya-Datto deal a look. If a request for more information surfaces -- which is common -- it could trigger another 30-day cycle on the M&A timeline, some sources suggest. Still, ChannelE2E does not anticipate the deal getting blocked. The MSP software industry, after all, is filled with healthy established rivals and well-funded upstarts that are gaining traction.

April 26, 2022 - Datto's Strength -- And Potential Weakness?:

  • Cloud-Managed Hardware: Datto announced a new storage appliance called the SIRIS 5. The news essentially reinforces one of Datto's greatest strengths -- and a potential weakness. Namely, the company's dependence on hardware appliances.
  • Reality Check: Datto and mainstream media continue to position the company as a provider of security and cloud-based software solutions. That's mostly true. And the business has been growing. But the descriptors gloss over the fact that Datto has a massive installed base of on-premises storage devices that link to cloud-based services. If pure cloud storage services somehow disrupt appliance-based business models, one of Datto's greatest revenue streams could be at risk. Moreover, Datto's network hardware business hasn't lived up to company expectations, ChannelE2E believes.
  • Datto Pivots: Datto remains committed to that SIRIS appliance business, but the company has also pushed hard into pure cloud storage and data protection services that don't require on-premises hardware appliances. Examples include Cloud Continuity for PCs, and Continuity for Microsoft Azure. Still, the Azure service is quite new and essentially late to market compared to multiple venture-backed data protection services that run on Azure, AWS and Google Cloud.

April 27, 2022 - Kaseya-Datto Clean-Room? (Not Yet)

  • What is an M&A Clean Room?: A clean room team is a "secure environment in which consultants, designated employees, or both can receive competitively sensitive information while continuing to adhere to the antitrust laws" during the M&A process, Deloitte notes.
  • Not Yet: Kaseya and Datto have not yet set up an M&A clean-room team, Kaseya confirmed to ChannelE2E. The apparent reason? It's simply too early in the M&A process, and communications between the companies remains minimal but cordial ahead of the deal's expected finalization in the second half of 2022.
  • An example M&A Clean Room: When Hewlett-Packard acquired Compaq in 2002, a clean room team (spanning both companies) worked to identify and coordinate HP-Compaq product roadmaps and organizational changes ahead of the M&A deal's finalization.

May 9, 2022 - Datto Quarterly Earnings: The results show Datto had momentum heading into the Kaseya M&A deal.

May 13, 2022 - Who Bid for Datto: An SEC filing and ChannelE2E reporting reveal who bid for Datto, how much and at what point in the M&A process.

Mat 14, 2022 - Why Thoma Bravo Exited the Bidding for Datto: ChannelE2E revealed exclusive details.

Still to Come: Next Kaseya-Datto M&A Milestones

June 20-23, 2022 - Kaseya Conference: Kaseya is scheduled to host the Kaseya Connect IT Global 2022 conference for MSPs and IT professionals in Las Vegas.

September 11-13, 2022 - Datto Conference: Datto is scheduled to host the DattoCon 2022 conference for MSPs in Washington, D.C. As of May 4, 2022, the official DattoCon 2022 conference website still lists a "save the date" rather than conference speakers, agendas and content. Among the big wildcards: Will the M&A deal with Kaseya close before or after DattoCon?

November 11, 2022: The deal needs to be completed by this date. However, a variable such as an "order or injunction arising under any Antitrust Law" can extend the deal completion deadline to April 11, 2023, according to a filing with the SEC.

Blog originally published May 4, 2022. Updated regularly thereafter. Keep checking back for continued timeline updates.

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.