Three people this week asked me if Kaseya plans to buy IT Glue. So far it sounds like MSP software industry speculation ahead of IT Glue's first-ever GlueCon conference (September 16-18, Phoenix). No sources have told me that a deal is coming, and I don't expect one.
Update 4:45 p.m ET Friday, Sept. 14: ChannelE2E has learned that no M&A deal involving IT Glue is imminent.
Rumors about a potential M&A deal involving the IT management software provider and the MSP documentation company surfaced in May 2018 (see items 2 and 1 here). Still, an actual M&A deal hasn't surfaced. Nor have I heard any firm information that an IT Glue buyout is coming.
My personal hunch? Here's what ChannelE2E knows for sure vs. what the market is speculating.
- Confirmed: Kaseya is in the market for more acquisitions.
- Confirmed: CEO Fred Voccola is striving to announce one -- perhaps two -- or so acquisitions within the next few weeks or months.
- Confirmed: Plenty of companies have expressed interest in buying IT Glue over the past year or so. But expressing interest is far different than inking an M&A deal.
- Industry Speculation: So far, a Kaseya and IT Glue combination is speculation. I don't believe such a deal is coming. And sources tell us no deal is imminent.
- My Speculation: I do think Kaseya will complete one or two M&A deals to further boost revenues ahead of Kaseya's own potential company sale in the six to 18 months. But I don't know if IT Glue will be among the buyouts.
- My Next Step: Broaching the subject during GlueCon when I catch up with Day and Voccola at the conference.
IT Glue CEO Chris Day's Vision
Ultimately, IT Glue's ownership strategy comes down to CEO Chris Day's vision and ambitions for the privately held company. He could certainly sell at any time, in my opinion, and I suspect the price tag would be pretty lofty at this point. IT Glue's annual recurring revenue pushed beyond the $25 million mark back in 2017. Pure SaaS companies can occasionally fetch 10 times revenues -- yes, revenues -- in M&A deals.
No doubt, IT Glue has valued being a type of Switzerland in the MSP software market -- integrating with each of the major PSA (professional services automation) and RMM (remote monitoring and management) software providers, without playing favorites along the way.
A potential IT Glue sale to any of the major PSA and RMM providers would force Day and his team to work overtime to assure MSPs that the platform remains open and vendor-neutral. If a deal happened, I do think IT Glue would remain open and cross-platform. But if an M&A deal happens, it may also give rival MSP documentation software providers (i.e, Passportal) a potential doorway to drive closer relationships in the market.
Kaseya's Acquisition Strategy
Kaseya's acquisition strategy typically involves a long-term dance. It seems to start with deep integration and/or reseller arrangements. For instance, Kaseya acquired RapidFire Tools in recent weeks after deeply integrating RapidFire Tools technology with Kaseya's software earlier this year.
That multi-month Kaseya-RapiFire Tools dance allowed Kaseya to get familiar with the vendor before pulling the trigger on an M&A deal. Kaseya used a similar deep-integration strategy with Unitrends before merging with that business as well. (Side note: Kaseya and Unitrends also had the same private equity owner ahead of the M&A deal; that surely played a role in the business combination as well.)
Now, apply those Kaseya business lessons to the IT Glue relationship. Yes, Kaseya has had a deep integration and reseller relationship in place with IT Glue since about May 2018. But does that mean an actual M&A deal is coming? Again, I haven't heard any firm information that says a buyout will surface.
As for other potential Kaseya targets: Keep an eye on Spanning -- a cloud-to-cloud backup provider. Kaseya and Spanning announced an OEM relationship in April 2018. The two companies also have the same private equity parent. I don't know if an even closer relationship is coming. I don't even know how the OEM deal is performing so far. But I'll pursue an update during GlueCon.
As for the headline of this story: I don't have any firm info about Kaseya potentially buying IT Glue. I consider the chatter to be speculation. And sources say no deal is imminent. But I'll be sure to ask Day and Voccola about that industry speculation when I grab some time with them at GlueCon 2018 in Phoenix.
