Last month, Kaseya announced it has entered into a definitive agreement to acquire Datto (NYSE: MSP). Kaseya is a premier provider of unified IT management and security software for MSPs (Managed Service Providers) and Small to Medium-sized Businesses (SMBs), while Datto is one of the leading providers of global security and cloud-based software solutions built especially for MSPs.
According to reports, the transaction will be all cash and funded by an equity consortium led by Insight Partners with significant investment from TPG, Temasek, and Sixth Street Partners.
Generally, the reaction has been unfavorable - For Example, Andrew Kaiser, vice president of sales for cybersecurity threat research firm Huntress, simply posted a frowning emoji on Reddit as a response to the news. Huntress has a strong reputation as an advocate for MSPs. Some of the negativity stems from the fear that Datto’s customer service and product strength will be impacted; other industry pundits cited security concerns.
For example, a July 2021 ransomware attack by REvil hit nearly 60 MSP customers of Kaseya, and industry commentators worry that the surface area available for an attack grows as the industry consolidates. An unexpected consequence could be that a business attacked may not even have Kaseya software on their system, and yet would have to face a breach.
For MSPs who use Datto, it is time to be ever more vigilant. They must keep a very close eye on Remote Monitoring and Management (RMM) and Professional Services Automation (PSA) tools in order to protect their customers and clients from future kaseya ransomware attacks.
For an SMB that leverages an MSP, it will be critical to evaluate its third-party risk management (TPRM) program. This would make them aware of whether they face secondary and tertiary threats created by their MSP’s software and security choices.
Many MSPs are uneasy about the Kaseya – Datto deal because it raises many concerns and questions about Datto’s products, security, and support under the Kaseya umbrella. While most questions remain unanswered, the situation will become clearer once Kaseya finalizes the acquisition of Datto in the second half of 2022.
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