My thoughts on the Datto acquisition—and what it means for your business

by | Nov 16, 2017

It’s been three weeks since Datto announced it was being acquired by investment firm Vista Equity Partners. And while the news may not have come as a total shock, many of us are still digesting the details and looking ahead to see how the Datto acquisition might play out in the long term.

What will it all mean for the thousands of small and midsize businesses that rely on Datto’s business continuity solutions to back up and protect their valuable data?

Spoiler alert: probably nothing.

The way I see it, things will be business as usual at Datto and for the organizations that rely on its leading-edge technologies around the world.

But things could get interesting for the managed service providers (MSPs) that promote Datto’s products. That’s because there is another huge component to the Datto acquisition: Datto is merging with Autotask, the IT business-management software company that was also acquired by Vista in 2014.

I’m excited to see the collaboration and offerings that will be produced by the merging of these two companies, and I believe it will ultimately result in even better service for the companies that use Datto’s solutions.

But let’s first dig into the details of the acquisition to see what it all means.

Inside the Datto Acquisition

I want to start by giving a brief overview of all the players involved in the acquisition, especially for those who might not be super familiar with Datto and its products.

I’ll begin at the top with the company that’s doing the acquiring: Vista Equity Partners.

Who is Vista Equity Partners?

Vista Equity Partners is a private equity firm that is primarily focused on investments in software, data and technology companies. According to Datto’s press release, Vista has “$30 billion in cumulative capital commitments,” made through 290+ transactions. The firm has offices in Austin, San Francisco, Chicago and Oakland.

Their basic philosophy is to acquire, fund, build and grow successful companies, usually becoming the majority shareholder. Vista says its investment approach is “anchored by a sizable long-term capital base, experience in structuring technology-oriented transactions, and proven management techniques that yield flexibility and opportunity in private equity investing.”

In a nutshell, like any other private equity firm, they invest in good companies with the hopes of making those companies even better (and more profitable for everyone involved).

Now, let’s look at Vista’s two merging acquisitions: Datto and Autotask.

Datto

Datto, as you may know, provides a wide range of business continuity and networking technologies designed to help businesses maintain uninterrupted access to its data, on-site and in the cloud. Its backup and disaster recovery (BDR) devices have changed the game of data backup with innovations like Inverse Chain Technology, Instant Virtualization and built-in ransomware detection. Thousands of IT service providers manage and implement Datto’s solutions for 100,000+ businesses around the world.

Autotask

Autotask provides a cloud-based business management platform for IT service providers. With features like CRM, project management, time and billing, reporting and end point management, the Autotask platform is designed to help MSPs improve the efficiency and productivity of the businesses and provide better service to their clients. It also gives those MSPs better insight into their businesses, with comprehensive analytics. Autotask says that its solutions are used by 9,000+ IT service providers worldwide. Autotask was acquired by Vista Equity Partners in June 2014.

Datto Partners, Supercharged?

I think you can probably see where this is going.

Autotask could be a perfect fit with Datto when you consider Datto’s focus on its “partners“—the thousands of MSPs that market and implement Datto’s technologies.

What’s unique about Datto is that it is a 100% channel-based company. In the words of Datto itself, “The Datto story starts and ends with our partners.” The company provides an incredible amount of support to its MSPs, equipping them with numerous tools and marketing resources with the goal of helping those businesses grow. (What’s good for those MSPs is good for Datto, after all.)

I can personally vouch for Datto’s commitment to its MSPs, because Invenio IT is a Datto Blue Partner (a designation given to the top-performing 5% of all Datto partners). Datto cares about the IT service providers who sell their products, and the company goes above and beyond to help them succeed.

By merging with Autotask, Datto is equipping its MSPs with an ever greater suite of resources for managing and building their businesses.

But that’s just one side of the coin. The reverse of that relationship is also true…

Autotask Users: Say Hello to Datto

The thousands of IT providers who use Autotask will likely now have a streamlined path for becoming Datto partners, or at the very least, accessing Datto’s solutions within the platform.

Autotask already offers some of its own solutions for data backup and File Sync & Share—available as standalone resale products and unified with Autotask’s business management platform.

The Datto-Autotask merger should result in a tighter integration of both company’s platforms. It should allow Autotask users to rapidly equip their clients with the Total Data Protection that Datto’s clients enjoy.

Also, consider that many MSPs already use both companies: i.e. some Datto partners also use Autotask to manage their business. These MSPs in particular will almost certainly benefit from a unified solutions integration.

The Official Word

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We don’t have to speculate too much what this all means going forward (though we will anyway, below). The official announcement from Datto, Vista and Autotask explains the Datto acquisition pretty clearly.

Here are the key points from the press release:

  • “The only complete business and technology software suite”
    Right off the bat, the press release announces that the combined companies of Datto and Autotask will create “the only complete business and technology software suite for the world’s most successful technologies.” So clearly, the merger is mostly focused on unifying the Datto Partner platform with Autotask’s platform.
  • “Significant opportunities for the IT channel”
    The release goes on to say that the merging solutions will create a single provider able to meet the wide-ranging needs of IT service providers from operations through service delivery, including professional services automation (“PSA”), backup and disaster recovery, networking continuity, file sync and share, and remote monitoring and management (“RMM”).
  • 500,000 end clients in 125 countries
    Clearly, all the parties involved see big opportunities by combining Datto’s and Autotask’s sprawling customer bases worldwide—and their MSP partners. It’s a reciprocal relationship that should lead to more growth all around.
  • “The next level” for MSPs
    Vista doesn’t beat around the bush. In the press release, CEO Brian Sheth says Vista has already been accelerating the growth of Autotask and that merging it with “Datto’s impressive talent and deep expertise in backup and networking solutions will take us to the next level and deliver extraordinary tools and services to MSPs worldwide.” Again, it’s all about the IT service providers.
  • Bringing more offerings to Autotask’s channel
    Autotask CEO Mark Cattini emphasizes that the opportunity is a big one for its MSPs. He states in the release, “This merger marks a natural step in our evolution as we continue to bring more managed service offerings to the channel.” But he goes a step further by adding that the merger also ultimately benefits end customers—the businesses that their MSPs serve: “We look forward to using our combined scale to do even more to help our customers grow, succeed and increase profitability.”

 

What does Austin McChord say?

Datto CEO Austin McChord is a unique success story in that he built the company from the ground up, literally: He started Datto out of the basement of his Norwalk, Connecticut, home in 2007.

Under his leadership, Datto has experienced phenomenal growth in just 10 years and has single-handedly disrupted—and reinvented—the BDR space.

So, let’s just say McChord’s voice matters in all this. If merging with Autotask and being acquired by Vista was not a smart idea, he wouldn’t do it.

Not surprisingly, McChord will continue to take the helm as CEO of the merged company, working alongside Autotask CEO Mark Cattini, who will serve as a strategic advisor to the Board of Directors.

Here’s what McChord had to say about the news:

“We’re honored to be joining forces with both the world’s premier software investor, Vista Equity Partners, and with Autotask, the provider of the most essential tools for the MSP space. This unique combination of talent with a track record of success marks a new chapter that will make an even bigger impact for our Managed Service Provider partners, by delivering an unprecedented set of capabilities for them to serve millions of small businesses in the future.”

Speculating the Road Ahead

So, let’s speculate for a moment what the long term might look like.

Could Autotask be completely absorbed by Datto, essentially becoming just a tool for Datto’s partners? Perhaps. But would that mean Datto would then market itself to MSPs as an IT business management solution? It seems more likely that Autotask will continue to be marketed as its own separate solution, so that it continues to attract MSPs who are looking solely for such a platform and not necessarily a partnership with Datto.

Could the Datto acquisition mean a larger investment in marketing and brand awareness? That’s certainly on my wish list! For as large as Datto’s customer base already is, there are millions of other vulnerable companies who could use Datto’s backup and networking solutions—many of whom don’t even know Datto exists.

For now, it’s all wait and see—the deal still has to pass the usual regulatory hurdles before it’s finalized—but I’m excited to see what lies ahead.

Let me know your thoughts in the comments!

Learn more

For more information on business continuity solutions from Datto, talk to our experts at Invenio IT. Request a free demo, or contact us by calling (646) 395-1170 or by emailing [email protected].

Dale Shulmistra is a Business Continuity Specialist at Invenio IT, responsible for shaping the company’s technology initiatives — selecting, designing, implementing & supporting business continuity solutions to bolster client operational efficiencies and eliminate downtime.

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