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‘Vista Controls Us’: 5 Warnings From Inside Datto’s IPO

Ahead of its IPO, Datto is setting the stage for a potential conflict between investors and its private equity owner forewarning that ‘its interests may conflict with ours or yours in the future.’

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The Inside Risk

The bounding optimism inside Datto’s IPO filing -- which is expected to raise more than a half-billion dollars for the company as it embarks on a quest to win public investment in the IT tools that MSPs use everyday --has a downside as well.

As a part of its expected listing on the New York Stock Exchange, Datto has disclosed financial data and organizational alignments that could pose a risk to investors. Among the items is the more than $590 million in debt that it has carried since it was bought by Vista Equity in 2017, and that it expects to take on an additional $200 million in debt, once the IPO goes through.

The company -- a provider of automation, networking, and storage technology to the MSP market --also mentions a bungled billing system conversion in 2019, that cost the company millions, but perhaps most striking is the stark language the company uses to communicate with investors about its private equity owner.

In a section of its S-1 filing labeled “risks related to owning shares of our common stock,” typical in regulatory filings, Datto titles the first section “ Vista controls us, and its interests may conflict with ours or yours in the future.”

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