Arcserve and StorageCraft are merging their data protection, backup and disaster recovery (BDR) technology businesses, the two companies say. The resulting storage company will be a Top Five pure-play provider of data protection technologies sold exclusively through channel partners, the firms assert.
The duo, backed by private equity firms Marlin Equity Partners and TA Associates, expects the deal to receive regulatory approval within two to four weeks, company executives tell ChannelE2E. Financial terms were not disclosed.
This is M&A deal number 138 that ChannelE2E has covered so far in 2021. See all technology M&A deals for 2021 and 2020 listed here.
The combined company, to be called Arcserve, will have roughly 900 employees. Following the merger, StorageCraft will be branded as "StorageCraft, an Arcserve Company."
Arcserve CEO Tom Signorello will lead the combined business. StorageCraft President Douglas Brockett will shift to that title at Arcserve. The combined executive team will have a mix of Arcserve and StorageCraft veterans, Signorello says.
Arcserve and StorageCraft: Target Synergies
At first glance, the deal involves data protection product families with overlapping capabilities, ChannelE2E notes. But take a closer look, Signorello and Brockett say, and multiple deal synergies emerge. Chief among them, the executives assert:
- Regions: Arcserve is particularly strong in Asia and Europe, while StorageCraft is strong in North America.
- Channel Partners: Arcserve tends to work mostly with VARs and IT consulting firms; StorageCraft tends to work with MSPs.
- Target Customers: Arcserve tends to serve midmarket to lower enterprise accounts, a model that emerged under earlier owner CA Technologies. StorageCraft's MSP partners tend to support SMB customers.
Signorello and Brockett emphasized those synergies and others in a call with ChannelE2E.
Software Alignment, Private Equity Backing
Dig a little deeper, and you'll see private equity backing the deal.
- Private equity firm Marlin Equity Partners has owned Arcserve since 2014.
- TA Associates has owned StorageCraft since 2016.
Once the M&A deal is confirmed, Marlin will own a majority stake in the combined businesses. TA Associates will have a minority -- but "significant" -- stake in the combined company, Signorello and Brockett say.
Still, the executives emphasize that private equity did not drive the business combination. Instead, casual discussions between Arcserve and StorageCraft leaders began three years ago. Fast forward to early 2020, and more discussions involving Signorello, Brockett and StorageCraft CEO Matt Medeiros occurred.
The 2020 conversations accelerated from there, the executives say. Still, third-party M&A rumors also swirled around each company from time to time. ChannelE2E noted various M&A chatter involving Arcserve in January 2020. And by August 2020, ChannelE2E noted M&A chatter involving StorageCraft and others.
Merger Priority: Protect Partner Investments
Fast forward to present day. Arcserve and StorageCraft are the ones getting hitched. Moreover, Signorello and Brockett say they will protect each company's existing channel partner relationships. That commitment, the duo says, includes:
- There's no definitive timeline to phase out company names or brands, since partners value the established, recognizable Arcserve and StorageCraft brands.
- There's no plan to sunset (i.e., end) any products, since partners have invested time, money and training to sell and support each product portfolio.
- There is a commitment to link all of the products together through a single pane of glass.
- There is a commitment to business growth -- and partner-related growth. Arcserve grew 9 percent in fiscal 2019, 12 percent in fiscal 2020, and 7 percent for the fiscal year 2021 -- which is set to end in March, Signorello says. Recent growth would have been even greater, but the pandemic pressured hardware supply chains in Japan, Signorello adds.
- "Some competitors are pulling back on marketing and payments to channel," Signorello says. "We are a healthy, large business and we’ll get aggressive with the channel. We will remain 100% channel with no direct selling motion."
- "We are not going to be ignorant about the years of investment that channel partners have made in Arcserve and StorageCraft," Brockett added.
Entrenched, Aggressive Competition
The Arcserve-StorageCraft merger certainly has a large product portfolio, and a pure channel emphasis. But a range of entrenched and emerging rivals loom. Here's a sampling of Arcserve-StorageCraft rivals -- both emerging and established. Together, Arcserve and StorageCraft will strive to scale past many of those rivals.
