IT Glue, part of Kaseya, has acquired TruMethods -- a peer group organization and software developer led by MSP industry pioneer Gary Pica (pictured above). Financial terms of the deal were not disclosed.
This is technology M&A deal number 253 that ChannelE2E has covered so far in 2021. See all technology M&A deals for 2021 and 2020 listed here.
The deal arrives amid GlueX 2021, a virtual MSP conference hosted by IT Glue. Moreover, the acquisition surfaces as parent Kaseya explores potential next moves that may involve an IPO (initial public offering) later this year.
Kaseya, IT Glue and TruMethods: The Strategy
At first glance, the deal appears to counter ConnectWise's purchases of HTG Peer Groups in 2018 and Service Leadership in 2021. HTG's Arlin Sorensen and Service Leadership's Paul Dippell are well-known business champions and educators across the MSP sector.
Gary Pica is held in equally high regard -- having launched, built and sold multiple MSPs, while also educating thousands of IT service providers within peer groups or through guest appearances at larger IT conferences.
But dig a little deeper, and the IT Glue-TruMethods deal also arms IT Glue with a software platform known as myITprocess. Indeed, myITprocess is a virtual CIO (vCIO) software platform that MSPs use to:
- analyze clients’ technical environments;
- establish their IT standards;
- make business recommendations;
- track client feedback; and
- develop custom, strategic roadmaps specific to each client, the companies say.
Now, that myITprocess tucks into the IT Glue business -- which develops a widely deployed MSP documentation platform. Roughly 8,500 partners serving over 150,000 users run IT Glue. Integrations between IT Glue and myITprocess are in place, Nadir Merchant, CTO and general manager, IT Glue, tells ChannelE2E. Plus, 95 percent of myITprocess users leverage IT Glue, Pica adds.
Pica and the TruMethods team will continue to be based in New Jersey, and Pica will continue to lead the associated MSP peer groups.
Fred Voccola and Gary Pica Talk M&A
As part of the M&A discussions, Pica wanted assurances that he could focus on empowering all MSPS with business guidance -- rather than becoming a pitchman for Kaseya's software. Kaseya CEO Fred Voccola says he agrees with that sentiment. "The community can't go away, and the community can't turn into a platform for a Kaseya commercial," Voccola says.
Pica and Voccola have known each other since Voccola joined Kaseya in July 2015. At the time, Pica and MSP marketing pro Robin Robins each (separately) reached out to Voccola and ultimately delivered a similar message: Kaseya needed to work hard -- and fast -- to rebuild trust across the MSP community.
That trust had eroded amid a Kaseya ownership and leadership shift from 2013 to around 2015. Heeding the advice, Voccola ultimately righted the ship, restored Kaseya to growth, and expanded the software company into data protection, cybersecurity, compliance, and more. This 2020 ChannelE2E article largely recaps Kaseya's turnaround, acquisitions and growth.
Now, fast forward to 2021. Discussions between Kaseya and TruMethods shifted from partnership to acquisition, Voccola says. The resulting M&A deal shifts myITprocess's software development into the hands of IT Glue -- a true software company. Among the winners working behind the scenes: TruMethods CTO Bob Penland, who will now see the myITprocess platform backed by more developers.
Meanwhile, Pica is freed up to focus on his first business love -- TruMethods peer groups. Those peer groups, Voccola and Pica assert, will remain open to all MSPs and won't transform into Kaseya product pitch sessions. Still, Kaseya partners will receive at least one perk -- discounted TruMethods peer group membership, which Kaseya will essentially subsidize for partners.
Kaseya: The Chess Match Continues
Meanwhile, Voccola continues to watch the MSP ecosystem, rivals and the financial markets closely.
Kaseya raised $500 million in private equity funding in 2019. Key participants in that round included private equity firms TPG and longtime owner Insight Venture Partners. Insight has backed Kaseya since 2013.
During 2020, Voccola strongly suggested that Kaseya would be a publicly held business in late 2021. Another step in that potential journey is about to be completed: By the end of May of 2021, Kaseya's internal business and financial controls will reach key milestones in case the company wants to pursue public markets later this year, Voccola says.
Kaseya's own business dashboard looks strong. The company generated about 29 percent organic growth in Q1 of this year, along with 23 percent EBITDA margins during the period, Voccola says. He remains upbeat about Kaseya's long-term business prospects, predicting SMBs will increasingly tap MSPs as total business service providers for all outsourcing needs.
On the financial front, the question facing Kaseya involves the value of being private vs. being public, Voccola says. The company could also recapitalize, and/or build a war chest to further roll up the MSP software industry, he says.
Recent business automation IPOs -- particularly UiPath -- have performed well. Also of note: Kaseya rival N-able is expected to spin off from SolarWinds in the first half of this year. And Datto is set to announce Q1 earnings on May 12, 2021.
So what truly is Voccola's next move? The simple answer involves keynoting the virtual GlueX 2021 conference today (May 4, 2021) and formally announcing the IT Glue-TruMethods deal. Anything beyond that would be ChannelE2E speculation... ...