Kaseya third managed services vendor to sell

This week, the provider joined a stream of MSP acquisitions. Larry Walsh reports

They say things come in threes, and that's what's happened in the managed services segment this week. Kaseya International has become the third remote monitoring and management vendor to sell out in the last month.

New York-based Insight Venture Partners, a venture capital firm specialising in underwriting mature technology companies, bought Kaseya for an undisclosed amount on Monday US time.

As part of the deal, long-time chief executive Gerald Blackie and founders Mark Sutherland (pictured, below right) and Paul Wong will exit the company. The new CEO is Yogesh Gupta, the former chief technology strategist at CA and former CEO of FatWire Software.

"We have spent over a decade building a successful business from the ground up. I am extremely proud of the Kaseya team, our worldwide customer base and our award-winning, best-of-class products," said Blackie in a statement.

"Gupta's blue-chip credentials, coupled with the experience, guidance and investment strength of Insight Venture Partners, bring a strong and committed partnership."

In late May, N-able Technologies was sold to Austin-based SolarWinds for $120m (£78m), providing that company with an extension into the SMB market segment.

In early June, Level Platforms was bought by security specialist AVG for an undisclosed amount, giving Level global resources and AVG a new product line.

Insight has a history of giving leadership and funding to companies on the verge of accelerated growth. It's not uncommon for leadership changes following Insight investment, as growth often requires a change in style and experience.

The Insight portfolio is replete with robust tech companies, including GFI, Mimecast, Acronis, DataCore Software and Twitter.

First order of business for Insight and Gupta is ensuring no disruption to current operations. The investors and new management say they're committed to maintaining the foundation built by Kaseya and Blackie's team.

"Kaseya is the market leader in IT management solutions for MSPs and midmarket enterprises," said Mike Triplett, managing director of Insight Venture Partners. "We intend to expand on that leadership position and bring significant value to Kaseya, its customers and its employees."

The installation of Gupta as CEO could be a telegraph of Insight's future aims. A venture capital firm like Insight isn't interested in building a company up for an IPO event. Rather, it wants to build the company's equity and flip it for profit.

This is probably what happened at N-able, which took on venture funding in 2011 from Accel-KKR.

Kaseya is a different animal. While it provides remote monitoring tools to MSPs, it has always positioned itself as an IT automation vendor rather than a remote monitoring and management vendor.

While Kaseya has a substantial MSP ecosystem, it sells more software to small enterprises for internal automation, and this direct-sales approach has been a longstanding source of channel friction.

Gupta, who has a history of managing enterprise products, could be the catalyst for expansion. Selling to the enterprise has advantages over the conventional managed services market; deal sizes are larger, more profitable and more quickly recognised.

With Gupta's connections in the enterprise market, it wouldn't take much to expand Kaseya's existing beachhead.

As Gupta said: "Kaseya's customers rely on its market-leading IT service management offerings, and we will continue to evolve our offerings to meet their changing needs while delivering a compelling value proposition.

"Industry trends such as BYOD and cloud computing are creating challenges and opportunities for companies. I look forward to leading Kaseya to its next level of success through accelerated innovation, and partnering with our customers to drive their success in this new world."

Insight's connections could help Kaseya with such expansion. Insight has a history of using its portfolio of companies to accelerate sales. It's not uncommon for Insight companies to coordinate sales activity, and, in some cases, they provide special discounts to their brethren for products and services.

Some will speculate that the acquisition of Kaseya, Level Platforms and N-able in rapid succession represents the end of independent remote monitoring and management tools -- that such companies can't stand alone in the evolving market.

In reality, these companies were built for roll-ups; they are products that belong in a broader portfolio of systems vendors. It really isn't an argument about the end of RMM, but rather what took so long.

As for the change in leadership, it's a shame to see so many familiar faces departing following the cheque-cashing ceremony. But, truth be told, leadership changes are a necessity in these situations.

The title of a book by veteran writer on management issues Marshall Goldsmith says it all: "What got you Here won't get you There."

People like N-able's Gavin Garbutt, Level Platform's Dan Wensley and Kaseya's Blackie did great jobs building their companies, but a new mind and skill set are needed for the next evolution for growth.

As part of our special editorial partnership, CRN is republishing this article from Channelnomics