Kaseya’s Datto Acquisition: 5 Big Things MSPs Should Know

From Kaseya’s recent REvil ransomware attack to Datto’s recent security acquisitions, here are five important things to know about Kaseya’s $6.2 billion acquisition of Datto and what it means for MSPs.

Kaseya-Datto Will ‘Cover Everything Under The Sun’

In a blockbuster win for MSPs across the globe, Kaseya is acquiring Datto for $6.2 billion to create a new MSP platform leader with next-level capabilities in the fight against ransomware.

“If you’re under that Kaseya umbrella, it will now cover everything under the sun,” said Michael Goldstein, CEO of LAN Infotech, a Fort Lauderdale, Fla.-based MSP who partners closely with both Kaseya and Datto. “Compatibility-wise, integration-wise—this is great for MSPs all around. … We really haven’t seen something to this scale before.”

Boasting thousands of MSP customers each, Kaseya and Datto are poised to create a unique MSP-focused platform provider at scale via a merger expected to be completed by the second half of 2022.

The two MSP technology vendors provide a slew of software and services to tens of thousands of customers across the globe, ranging from ransomware prevention and detection to remote monitoring and management (RMM) and data protection for the cloud.

Combining Datto, a Norwalk, Conn.-based data backup software and disaster recovery specialist, with Kaseya, a Miami-based cloud security and management standout, will shake up the entire MSP market.

“We couldn’t be more excited about what lies before us—Kaseya and Datto will be better together to serve our customers,” said Kaseya CEO Fred Voccola in a statement today.

Kaseya’s all-cash acquisition of Datto will be funded by an equity consortium led by Insight Partners. Datto stockholders will receive $35.50 per share, which values Datto at around $6.2 billion.

Datto’s stock was trading up 21 percent Monday afternoon at $34.70 per share.

From Kaseya coming off a massive REvil ransomware attack to market competition with ConnectWise, here are five important MSPs should know about Kaseya’s acquisition of Datto.

Kaseya Coming Off Historic Ransomware Attack; Datto’s Ransomware Offers

MSP-focused platform providers like Kaseya and Datto have been at the center of some of the largest ransomware attacks in years. One of the biggest ransomware attacks ever on an MSP provider happened to Kaseya in July 2021, perpetrated by hacker group REvil.

The ransomware attack by REvil compromised nearly 60 MSPs and demanded ransom payments from up to 1,500 of their end user customers.

Kaseya said the cybercriminals were able to exploit vulnerabilities in its VSA tool to pass authentication and run arbitrary command execution. The vulnerability allowed REvil to leverage Kaseya’s VSA product functionality and deploy ransomware to customer endpoints.

The cyberattack left MSPs without access to Kaseya‘s flagship VSA product for at least four days. REvil demanded $70 million from Kaseya for a decryptor that could be used to decrypt the ransomware on the 1,000-plus end customers hit by the attack. The FBI eventually was able to access the decryptor tool and enable those customers to recover.

Datto has several cybersecurity offerings aimed at preventing and detecting ransomware.

For example, Datto RMM delivers policy-based patch management to keep clients’ machines secure and includes native Ransomware Detection which monitors for crypto-ransomware.

Additionally, Datto RMM monitoring alerts are intelligently routed into its Autotask PSA so technicians can focus on top-priority tickets. An intelligent alert-to-ticket engine reduces noise, strips out duplicates, and updates tickets with any new status from Datto RMM.

For secure SaaS data in the cloud, Datto says its Datto SaaS protection eliminates the risk of becoming a victim of a ransomware attack.

Kaseya-Datto Cloud ‘Leapfrog’ ConnectWise And N-Able

The merger of two of the biggest MSP-focused platform providers will put new competitive heat on rival ConnectWise.

The soon-to-be combined Kaseya and Datto will be able to better compete against N-Able and ConnectWise in markets such as remote monitoring and management (RMM), security and professional services automation (PSA) due to the Kaseya-Datto now massive portfolio and end-to-end integration capabilities between the companies, according to Michael Goldstein, CEO of LAN Infotech, a Fort Lauderdale, Fla.-based MSP.

Goldstein, who partners closely with both Datto and Kaseya, said the combination of the two companies creates a market competitive differentiation against the likes of ConnectWise and N-Able.

“This allows Kaseya to leapfrog ahead of the competition by adding all this technology together. Now, Kaseya’s product SKUs are endless,” said Goldstein. “It brings two big MSP-focused companies—Datto is 100 percent MSP-focused and Kaseya is up there too—so it’s bringing together a lot of great technology and combining a great backup strategy out there. There are great features that we’ll see from the Datto-Autotask side onto the Kaseya VSA side and VMS side. Now MSPs can have a pretty amazing combination of products.”

He said some ConnectWise MSPs and customers will soon have to wonder how ConnectWise-Datto integrated solution will be compared to a Datto-Kaseya solution.

Goldstein said a Kaseya-Datto merger of technologies will make the best “ingredients” available for MSPs and their customers.

“I view MSPs as technical chefs. We’re making the best recipe on the best set of ingredients. And now we really have one master plan to potentially follow,” said Goldstein. “You’re going to have to choose certain products if you’re a ConnectWise shop or an N-Able shop. But now the product SKUs will be endless for us.”

CEOs Weigh In On The Deal

Kaseya will double its employee headcount with the acquisition of Datto with both companies having around 1,700 employees in dozens of offices. The combined company is expected to have approximately 3,500 employees.

Datto ended 2021 with more than 18,500 MSP partners. Kaseya has several thousand MSP partners, although the exact MSP count is unknown.

Kaseya said over 40,000 organizations worldwide use at least one Kaseya software solution.

For its entire fiscal year 2021, Datto generated $619 million in revenue, up 19 percent year over year. Datto reported net income of $51 million, which represented a 130 percent increase compared to 2020.

Kaseya CEO Fred Voccola (pictured above) said global customers can expect to see more functional, innovative and integrated solutions after the deal is complete.

“Datto has a legendary commitment to its customers and employees. The alignment of our missions and focus makes us a natural fit, that will help our greatly appreciated customers reach new levels of success,” said Voccola in a statement. “Kaseya is known for our outstanding track record of retaining the brands and cultures of the companies we acquire and supercharging product quality. We couldn’t be more excited about what lies before us—Kaseya and Datto will be better together to serve our customers.”

Datto CEO Tim Weller said combining with Kaseya brings together a broader array of technology products to create additional opportunities for MSPs.

“I’m encouraged by the continued investment in the rapidly-expanding global MSP community, and this transaction is another important validation of the channel,” said Weller in a statement.

Datto Going Private Again After It Went Public Less Than Two Years Ago

Founded in 2007, Datto went public on the New York Stock Exchange on Oct. 23, 2020 with an initial stock price of $27.10 per share, hitting a peak a few weeks later at $32.72 per share.

The company had plans to raise more than half-billion dollars through its IPO, boasting more than 17,000 MSP customers and a market valuation of approximately $4 billion.

However, before Kaseya unveiled its acquisition plans, Datto’s stock was hovering between $24 to $26 per share since 2021.

As of Monday afternoon, Datto’s stock has climbed a whopping 26 percent due to the acquisition news. Datto’s stock is currently trading at an all-time high of $34.72 per share.

Miami-based Kaseya is a privatively held company with a presence in over 20 counties.

Kaseya said it plans to take Datto private again once the acquisition closes, which is expected to take place in the second half of 2022.

Datto Just Acquired Infocyte; Other Strategic Acquisitions

Datto has vastly expanded its product portfolio and customer-base over the years through strategic acquisitions, most recently with its purchase of threat detection and response specialist Infocyte. This new technology should also help Kaseya’s fight against ransomware.

Datto acquired Infocyte to better help MSPs protect, detect and respond to cyberthreats found within endpoints and cloud environments.

Infocyte offers both endpoint detection and response (EDR) technology and managed detection and response (MDR) services. The Austin, Texas-based security firm continuously collects and correlates data from endpoints to identify potential threats, and its technology is supported by analysts in a Security Operations Center who can respond in real-time to cyberthreats.

Another major acquisition that will boost the upcoming Kaseya-Datto combined entity is cyber threat detection firm BitDam.

Israel-based BitDam is the developer of the Advanced Threat Protection, or ATP, technology which offers comprehensive defense against malware, phishing, business email compromise attacks, account compromise, and spam.

“All of these companies are rolling up into one, which is great for an MSP like me,” said LAN Infotech’s Goldstein. “If you’re under that Kaseya umbrella, it will now cover everything under the sun. … We really haven’t seen something to this scale. I’m excited to be a Kaseya-Datto partner.”