Kaseya and Unitrends are merging in a deal that will create an IT monitoring, security and backup software company that supports MSPs and midmarket IT departments. Both companies are backed by Insight Venture Partners, a private equity firm. Unitrends now becomes a wholly owned division of Kaseya, CEO Fred Voccola confirms to ChannelE2E.
The M&A deal scales Kaseya to at least $200 million in total annual revenues, Voccola estimated during our conversation. The transaction is the latest in a lengthy list of private equity-backed deals that have reshaped the MSP software market in recent years. Additional PE-related deals have included:
- The recent Datto-Autotask merger, backed by Vista Equity Partners.
- Private equity involvement at AppRiver, Barracuda, Continuum and SolarWinds.
- The one major holdout in the MSP-centric software market is ConnectWise, which remains closely held by its founders.
- See related story: Private Equity Reshapes MSP Software Market -- Again.
- See related story: Kaseya-Unitrends Merger - Rivals React
Why all the activity? The answer is simple: Private Equity firms ultimately discovered what MSPs already know -- managed services are the greatest growth driver for any channel company these days, according to 2112 Group research.
Kaseya-Unitrends Product Strategy
The overall Kaseya product portfolio now includes:
- Remote monitoring and management (RMM);
- endpoint management, network monitoring and management (NMM);
- professional services automation (PSA);
- IT service desk; security; and
- backup and disaster recovery.
Kaseya's Voccola will run the combined company, and Unitrends CEO Paul Brady will run that business unit. Both executives know each other well, thanks to executive networking across the Insight Venture Partners portfolio of companies.
Unitrends has focused mainly on midsize enterprises. Kaseya, by contrast, mainly supports MSPs -- but perhaps 5 to 10 percent of revenues also come from midmarket customers. Both companies enjoy momentum -- but they also face fierce competition.
Key Rivals: Kaseya's core rivals remain ConnectWise, Continuum, Datto and SolarWinds, along with a range of startups and potential disrupters in the RMM software market. Each of those players except ConnectWise now owns a BDR system. In ConnectWise's case, the company partners closely with about a half-dozen BDR offerings, though Infrascale earned special mention at ConnectWise's IT Nation 2017 conference.
Unitrends' rivals, meanwhile, include fast-growing players like StorageCraft and Veeam; disrupters like Druva and Rubrik; and a lengthy list of entrenched backup firms.
Sales and Partner Strategy
The Kaseya-Unitrends merger concept surfaced somewhere during the time Kaseya was researching the market for an appliance-based backup and disaster recovery (BDR) solution. Unitrends essentially won an internal Kaseya bake-off hands down, Voccola says. Then, the two companies spent the past year formulating an integrated, applianced-based BDR product that integrates deeply with Kaseya's RMM platform, Voccola says. Among the key influencers who have helped to shape the Unitrends MSP strategy: Kaseya veteran Mike Sanders.
The result was Kaseya Unified Backup (KUB), which launched only a few weeks ago.
The more Unitrends and Kaseya spoke, the more the two companies realized they wanted to merge. The deal was not driven by their mutual private equity owner, Voccola says. To drive home that point, he notes that Brady is sticking around for the long haul to run the BDR business. "He's a super smart person and I need his help," Voccola notes.
Kaseya's potential cross-sell and upsell opportunity is massive, Voccola asserts. Indeed, Kaseya serves roughly 15,000 MSPs and Unitrends has roughly 10,000 midmarket customers -- with essentially no overlap between the installed bases, Voccola says.
Global opportunities may also emerge. Roughly 40 percent of Kaseya's business is international, while roughly 95 percent of Unitrends' business is North America -- which means the BDR company will likely gain international reach far more quickly now.
Plus, there's no ramp-up time for the Kaseya and Unitrends teams, Voccola says. The Kaseya sales team is already fully trained to support MSPs that want Unitrends. Likewise, the Unitrends team is deeply familiar with the Kaseya code base, thanks to their year-long work together.
"We understand their support, and they know ours," Voccola says. "But there are some things we can learn from them. They have the best customer service I’ve ever seen. It might be the nature of the product’s design. Their customers love them." Voccola also speaks highly of Kaseya's support, but says the company could gain some more best practices from Unitrends -- which claims to have a 98 percent customer satisfaction rating.
Saying Yes to Open APIs, BDR Alternatives
Kaseya also maintains a BDR relationship with Acronis for a pure-cloud backup offering -- aptly called Kaseya Cloud Backup. Plus, Kaseya will maintain open APIs to support third-party BDR offerings like Datto and others, Voccola says.
"I think openness in the market is an important thing," Voccala says. "Take Datto. We have thousands of partners that are using Datto. We have an integration with them. We'd all be stupid to abandon that."
Instead, Kaseya intends to win the battle based on innovation and integration. Unitrends' technology, he notes, is "literally built into our RMM" through Kaseya Unified Backup. More than a partnership, Kaseya now owns that intellectual property.
Overall, the deal should offer upside for Kaseya's MSPs -- especially those that are looking to consolidate and/or standardize their BDR offerings. But those entrenched rivals across the MSP software and backup markets remain quite strong as well.
So what's next? Kaseya sounds close to additional M&A deals. We'll dig for information next week at the Kaseya Connect 2018 conference in Las Vegas. And we'll triangulate our learnings while also attending DattoCon18 and ConnectWise Automation Nation in June...
