Here’s What Veeam’s $5B Acquisition by Insight Partners Means to Partners

… that it will be interesting to see how Veeam is handled by Insight Partners in the future.

Gabriel Consulting’s Dan Olds

“As a partner or customer, you’re always concerned when a vendor you depend upon has a change of management and/or ownership,” said Dan Olds, principal analyst of Gabriel Consulting Group. “You wonder whether the new management will continue to follow through on product enhancement, new product development and support. Those are valid concerns and something that the acquiring company needs to put to rest as soon as possible.”

Partners and customers will have to watch to see if Insight Partners makes cuts in any area of the company or if it plans to discontinue any products in the next year, he said.

“One of the things that causes a little twinge of disquiet with me is that the acquiring company is a venture capital and private equity firm,” which can be very aggressive about getting a high return on their investment, sometimes using the companies they acquire as cash cows. “I’m not suggesting that this is the situation with Veeam and Insight Partners, but just saying that it’s happened before. One of the key things to watch out for is their continuing investment in R&D. If that drops, then it’s a danger sign.”

Another analyst, Kevin Rhone of Enterprise Strategy Group, said he sees the Insight Partners investment in Veeam as a validation of the cloud backup and data recovery market and its growth potential.

“It sends a strong message to the marketplace on these things, plus the concept of ‘intelligent data management’ as a growth opportunity for the future,” he said.

Rhone also is interested in watching to see how Veeam will work to grow its service-provider business after the acquisition and how that will affect partners.

“As with many private equity moves into tech that we have seen, there will be added pressure to grow both organically and via acquisition,” said Rhone. “This potentially means the addition of new services and offerings that will need to be successfully integrated, but which could bring new ways for partners to differentiate and drive growth.”

Charles King, principal analyst with Pund-IT, said that while concerns about the deal might be a natural reaction for partners and customers when a strategic partner is acquired, such deals like Insight Partners’ purchase of Veeam are predicated on the idea of increasing a company’s value, not degrading it.

“In other words, though Veeam’s new owners and leadership may institute changes, it’s unlikely that those shifts will be so radical that customers and partners will head for the exits,” said King. “In fact, they may find new policies, programs and offerings are superior to what they had before the deal.”

Among the questions that partners and companies should ask, said King, are what changes are planned immediately or during the first six to 12 months after the deal closes, as well as who in the company will be responsible for customer and partner relations.

“Get the company on the record about the role partners will play in its future plans,” said King. “Veeam’s focus on deploying cloud-based backup and recovery solutions is a good strategy – it’s one of cloud computing’s better value propositions – but it’s also an area that public cloud players are pursuing themselves. If Veeam expects to continue expanding and prospering, channel partners are likely to play significant roles in that success. They deserve to know where they stand.”