Published on April 13th, 2022 📆 | 5377 Views ⚑
0Platform Play Behind Kaseya Acquiring Datto, Other Cybersecurity M&A
Partners have to have the flexibility of a pretzel to keep up with the volume of M&A.
Kaseyaâs $6.2 billion acquisition of Datto is likely a platform play, which is behind much of the accelerating cybersecurity industry M&A.
Thatâs according to cybersecurity channel leaders with Trellix, Fortinet, NTT Application Security, Proofpoint, Sophos and Malwarebytes. They discussed cybersecurity M&A during a roundtable at this weekâs Channel Partners Conference & Expo.
Also this week, KKR, a global investment firm, announced it is acquiring Barracuda Networks from Thoma Bravo in a deal reportedly worth about $4 billion. Thoma Bravo acquired Barracuda in 2018 in a $1.6 billion cash deal.
Brian Thomas is Malwarebytesâ vice president of worldwide MSP and channel programs. He said whatâs driving cybersecurity M&A is âdefinitely a platform portfolio play.â
âThereâs a lot of chatter on social media right now specifically around the Kaseya-Datto piece of this,â he said. âBut Iâd also say that to put a positive spin out there, especially for our MSPs, is Kaseya was growing 20% annually prior to this acquisition and obviously there is a lot being done right there. So even though thereâs so much product overlap between the two that I think will ferret out over the next few years, I think thereâs an overwhelmingly positive thing for MSPs out there with simplification that they can offer.â
Joe Sykora is Proofpointâs senior vice president of worldwide channels and partner sales. Thoma Bravo acquired Proofpoint last year for $12.3 billion.
âWeâll continue to see a consolidation for MSPs,â he said. âOn the one hand, youâve got the argument of it could make things simpler if they get it fully integrated. Iâm a little bit unique because I was an MSSP before I went to the manufacturer side and I know for me it was if I could get everything at one place, of course that was the easy button for me. With Datto and Kaseya specifically, thereâs two different platforms. I think a lot of MSPs here were probably using pieces of both. But I think the bigger question is we should probably talk to ConnectWise and see what they think. But this will definitely continue.â
Cybersecurity M&A Moving Fast
Kristi Houssiere is Trellixâs senior director of global channel strategy and operations. She said the volume of cybersecurity M&A is moving so fast and âso often itâs inevitable.â Trellix resulted from STG acquiring McAfee Enterprise and FireEye, and then merging the two.
âWe went around the room and every single one of us said oh, I was with so and so and then I got this one and then this one,â she said. âI think for our partners, itâs following the bouncing ball. I am sympathetic to our partners for them having to have the flexibility of a pretzel because weâre always changing. So but I think itâs inevitable.â
Matt Lantinga is NTT Application Securityâs vice president of sales and global strategic accounts.
âI think you have your serial entrepreneurs who are going to build these companies and theyâre going to get bought,â he said. âAnd theyâre going to do it over and over again. Thatâs what they do. They have great ideas and they build great technology. But their goal isnât to stay in the business forever. Theyâve got three more plans in their head.â
Thereâs also companies that buy their way into security, Lantinga said.
âTheyâre building platforms out there, not just a one-niche product like what theyâre buying,â he said. âTheyâve got a suite. Theyâve got a vision of expansion. In the short term, in my experience, it has a little bit negative impact on the products when they initially buy them. But if they do it right, and some of these companies do a great job and they integrate it into a suite, itâs much better for the customer. So now they have that company that has a lot more offerings rather than the niche product. So I think over the long term, it is a benefit and itâs not going to stop because weâve got entrepreneurs that know how to make a lot of money. Theyâve got a lot of great ideas and theyâre going to keep going.â
M&A Recognizes Value of Subscription Revenue
Scott Barlow is Sophosâ vice president of global MSP and cloud alliances. Thoma Bravo acquired Sophos in 2020 for nearly $4 billion.
âI think the the platform play is partially whatâs driving all of this,â he said. âAlso, the recognition of the value of subscription revenue. With MSPs, itâs being valued much higher than just a traditional resale model. It has definitely accelerated. And with cybersecurity the way it is in the world today, I can see it maintaining this speed for awhile.â
Jon Bove is Fortinetâs vice president of channel sales.
âI think on one hand, if thatâs the path that these companies are going, thatâs how theyâre maximizing shareholder value or the value of their own company,â he said. âAnd so I think with the market dynamics, itâs going to be interesting to see even the levels of initial public offerings (IPOs) versus private equity acquisitions. The common point around the table is platforms are needed to protect against the advanced cyber threats of today, and they view this consolidation as a path to get there. So itâs a good business model to help their customers and the partners.â
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