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What MSPs can expect as Kaseya closes in on Datto deal

What MSPs can expect as Kaseya closes in on Datto deal

More product investment and cheaper pricing.

Fred Voccola (Kaseya)

Fred Voccola (Kaseya)

Credit: Kaseya

The decision by Kaseya to acquire Datto surprised many managed service providers (MSPs) when the news broke in April.

The all-cash US$6.2 billion transaction is expected to close in the second half of 2022 with Kaseya CEO Fred Voccola saying customers can expect to see more functional, innovative and integrated solutions as a result of the purchase.

MSPs have a right to be concerned about how the deal will play out for Datto – evident by the creation of goodbyedatto.com – considering Kaseya’s history with acquisitions in the past such as IT Glue, recent security related issues and how the subsequent fallout was handled.

In response, MSPs are watching diligently to understand how Kaseya’s true intentions will play out and affect key considerations such as product development, product support and channel engagement. Not only that, but cultural alignment is expected to be another huge factor in the mix.

Kaseya’s maintained a phenomenal acquisition track record in the past and during the time Voccola has been CEO, there have been 12 acquisitions bolted into its management platform IT Complete. 

Voccola emphasised in an interview with ARN that during his time, in every acquisition, Kaseya has kept the identity of the company intact. 

“Every company we bought, we've substantially increased the financial resources and investment in product, research and development, support and back office capability for customer experience,” he said. 

“We've never done mass layoffs or shut down offices. That's not why we buy companies. We've always made every company's products that we bought more affordable after the deal,” he said. 

“I understand people have fear, doubt and uncertainty because it's a change. But we are 100 per cent not eliminating products, we are not eliminating the Datto brand. There are no plans to shut down or change the Datto culture.”

Voccola said Kaseya’s rationale for buying Datto was to increase “what makes Datto great”.

In regards to maintaining multiple products in similar categories, Voccola said the answer was a definitive yes.

“We are having multiple or similar products in several categories,” he said. 

“For a company like Kaseya moving forward to say it might need to have 100 to 300 more engineers to maintain multiple products and to invest in multiple products - PSA (professional services automation), RMM (remote monitoring and management) and backup. That's maybe US$15 to US$25 million per year. 

“Kasaya plus Datto, we'll be banging up against US$2 billion in revenue and US$800 million in EBITDA [earnings before interest, tax, depreciation and amortisation] in the very near future. So an extra US$20 million of costs to make sure that we don't anger thousands of MSPs is nothing really.

While finer details around the integrated company structure have yet to come to the fore, Voccola hinted that previous acquisitions are good example of how that will shape up. 

“You can look to the past to be a good guidance for the future,” he said. “Out of our 60 executive members, 40 of them have come from acquisitions that we've done.

“We don't buy companies to break them. We buy companies because we want to get what makes them great. Datto is an awesome company, they have great people and Rob Rae (senior VP of business development) is the face of that. We would be mad if there's great talent like that, we would not put in positions for them.”

Voccola said in regards to pricing, it has never raised prices, rather making products more affordable.

“We've done huge levels of investment and that's what can be expected,” he said. 

As its stands, Kaseya offers one, two and three year contracts, with Voccola stating that even its one-year offering is still cheaper than its competitors but it does incentivise customers to accept three-year terms at a locked-in price. 

“There’s a couple of reasons we do that and worldwide, we all see inflation, it's hitting everybody so our customers can lock in the low price for the next three years. The second thing is if our product in one year is 30 per cent cheaper than our competition and software prices rise 10 per cent a year, we're still 60 per cent cheaper at the end of three years.

“We ask for a commitment on that because it means we can predict our revenue streams and we can invest more in R&D because there's less variance.

“It's a business choice. Everything we do, we try to do so a Kaseya MSP makes more money than a non-Kaseya MSP. We think we provide really good technology at the lowest price and that makes it a win for everybody.

Voccola said its intentions were super clear - the Datto brand and culture will remain. 

“We would be fools if we broke that,” he said. “We want the Datto culture to make the Kaseya culture better. All these concerns are valid because it's a change and change makes people nervous.

“We are going to do everything in our power not to stuff it up.”


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