What Does the ConnectWise Buyout Say About the MSP Market?
Last week, investment firm Thoma Bravo announced it’s acquiring ConnectWise, the last major player in the MSP business management space to accept private equity. It’s a sign to many that the market is on its way toward being a fully-mature sector, but what does that really mean?
Most business experts identify four general stages of any market’s growth:
- Introduction: A hot new technology or product first enters the picture, usually in startups.
- Growth: As more customers adopt a technology, you see improved features, easier navigations, complementary product releases, and more accessible pricing.
- Maturation: The big players cement their place at the top of the heap, which makes it harder for new entrants to get off the ground, the tech becomes mainstream and widely adopted, driving down price, and innovation slows down.
- Decline: The tech becomes obsolete, the big players have to evolve or die, and customers begin to adopt the next generation of products.
Managed services straddles the second and third stage right now, moving from a growth industry to a mature market at warp speeds. The market leaders are pulling away from the rest of the pack, and they’re driving consolidation through mergers with or acquisitions of other providers and, as we saw last week with ConnectWise’s acquisition by Thoma Bravo, helped in large part by institutional investors.
This is great news for MSPs wanting to build a business in a more civilized IT channel, where the Wild West “anything goes” ethos is beginning to be replaced by market forces that want order and some level of predictability. Partners should also be encouraged by the billions of dollars of private equity flowing into the managed services space as big-deal investors acknowledge the market with a flurry of acquisition activity. In the last little more than five years, the top five players in the MSP business management software space – Kaseya, Datto (Autotask), SolarWinds, Continuum, and ConnectWise – have all accepted private-equity buyouts. And while the terms of most of those deals are undisclosed, the combined total of those deals conservatively adds to $8-$10 billion or so. (The general market consensus estimates ConnectWise’s price at about $1.5 billion. Not a bad day for founder and former CEO Arnie Bellini.)

Continuum’s Michael George
“These guys don’t buy companies at the end of the life of an industry,” says Michael George, CEO of Continuum.
Investment firm Thoma Bravo owns Continuum and now ConnectWise, and retains a major stake in SolarWinds, which it took private in 2016 and then public again last year.
“They buy them in the beginning, and this is just the beginning … The best is yet to come.”
Insight Venture Partners picked up Kaseya in 2013, and Vista Equity Partners bought Datto in 2017, merging it with Autotask. These three private-equity firms are some of the most well respected in the country, and their heavy investment into the managed services market is a very good sign for MSPs.
“It shows that the business MSPs are in – providing IT solutions for small to midsize companies – is something that three of the top investment firms in the world believe is a place to place billion-dollar bets,” explains Fred Voccola, CEO of Kaseya. “So if you’re a local MSP…know that some of the smartest people in the world think …