Major deal, which includes acquisition of ITBoost and a partnership with Webinfinity, will reshape managed service market
In a deal telegraphed by insiders for weeks, ConnectWise typified a series of big announcements with a mega-deal to acquire rival Continuum, likely creating the largest managed service platform in the industry. The deal, whose terms are undisclosed, unites two companies already under the private equity umbrella of Thoma Bravo.
The Lowdown: Continuum, one of the oldest and largest managed service platforms and portfolio companies, also announced the acquisition of ITBoost, a specialist in documentation management, a move designed to improve the process and service delivery recordkeeping of MSPs.
Additionally, ConnectWise is entering a strategic partnership with Webinfinity, a portal and partner relationship management (PRM) company, to create a new resource for connecting managed service providers with ConnectWise, associated technology vendors, and support resources.
The Details: The marriage of ConnectWise and Continuum is the pillar of the announcements at ConnectWise’s annual IT Nation Connect event in Orlando. In an interview with Channelnomics, ConnectWise CEO Jason Magee and Continuum CEO Michael George spoke of how the two companies complement each other more than overlap, unlocking tremendous opportunity by coming together.
ConnectWise started as a professional services automation (PSA) platform, but over the years added additional capabilities such as remote monitoring and management (RMA), automated quoting, and artificial intelligence (AI)-based support management. Also, ConnectWise is one of the most extensible managed service platforms through APIs that link more than 260 vendors to its MSP community.
Continuum, a company built out of the ashes of the once-vaunted Zenith Managed Services, supports MSPs through a hosted model under which its NOC and SOC technicians perform tasks on behalf of users’ companies. Continuum, like ConnectWise, incorporated several complementary companies in areas such as backup, security, and network discovery.
ConnectWise says the addition of Continuum to its portfolio will expand its capabilities, give managed service providers options for how to service and support their clients, and create the capacity to scale scarce technical resources.
ConnectWise did not say how it will incorporate the Continuum offerings or culture into its own, which has different operational and financial models. In addition, it’s unclear which RMM tool will dominate in the new company or if it will continue to offer the ConnectWise and Continuum versions.
The Impact: Combining ConnectWise and Continuum will rewrite the managed service platform landscape. ConnectWise is likely the undisputed market leader following the deal, creating a four-way race with Datto (which merged with Autodesk in 2018), Kaseya, and SolarWinds. Undoubtedly, some managed service providers will look for realignment as they won’t follow the merged entity. However, chances are the new ConnectWise will retain most of the MSPs under the respective companies’ umbrellas. The combined company will also have significant market power, attracting more complementary vendors to enhance its offerings without compromising its open platform strategy. Magee told Channelnomics that ConnectWise would maintain its open platform philosophy.
Background: Speculation of a merger between ConnectWise and Continuum began earlier this year when private equity firm Thoma Bravo acquired ConnectWise. The PE firm acquired a controlling interest in Continuum in 2017. Thoma Bravo, a significant investor in a variety of services and security technology companies, typically doesn’t roll up its portfolio assets.
As recently as four weeks ago, Continuum’s George telegraphed the merger of ConnectWise and Continuum. In an interview with CRN, George speculated that merging ConnectWise, Continuum, and Datto would make an optimized managed service platform. In an interview with Channelnomics, George maintained his belief that every industry segment consolidates into the top three providers, and this merger is a significant step in that maturation process.
The Buzz: “Over the last 15 years, ConnectWise has become the leading provider of technology solutions and services to MSPs. Now, by executing on these deals, we will be able to expand our scope and capabilities to assist the broader community of TSPs in all facets of their business,” said Magee. “This is a revolutionary play, making ConnectWise the epicenter for everything from business management and documentation to service delivery and operations management, while also making it much easier and more efficient for partners to work with the technology suppliers they have in their stacks.”
“The combination of Continuum and ConnectWise enables solution providers to transform their business leveraging artificial intelligence, autonomic remediation, and a global workforce when necessary, providing our partners with infinite and elastic scale,” said George. “Our two organizations complement each other perfectly, and the journey Continuum has been on for the past eight years—including our acquisitions of R1Soft, CARVIR and BrightGauge—has led to this transformational merger. The future opportunities for MSPs are extraordinary, and this combined platform empowers them to capture and capitalize on it.”
Counterpoint: Fred Voccola, CEO of competing MSP and remote IT platform maker Kaseya, said he wasn’t surprised by Thoma Bravo’s mashup of Continuum and ConnectWise. “It’s their best economic option,” he said.
Voccola called the deal “great from an industry perspective” because it demonstrates the commitment institutional investors have to the growing MSP space. He predicted some bumps in the road, however, for the two newly merged rivals and their MSP user bases.
“Both ConnectWise and Continuum are relatively the same size and offer users competing RMMs,” Voccola said. Going forward, “they’ll likely focus on investing in just one tool’s continued R&D, technical support, and customer enablement.
“This will ultimately force half of their users to migrate to the company’s preferred tool, an often costly and time-consuming effort,” he said.