Cybersecurity Investments Point to New Opportunities for MSPs

The data and network protection market is hot. From the smallest firms to the largest enterprise organizations, businesses need quality cybersecurity support, and most can benefit from a range of other services that MSPs deliver. Researchers suggest that the demand for those mutual IT-related offerings will reach unprecedented levels in the near future.

In such a competitive landscape, MSPs will inevitably want to scale, increase their cybersecurity portfolios, and generate greater profits for their continuing efforts. Recent industry investments are bolstering that outlook. Acquisitions in the cybersecurity segment have been going off the charts over the past few months. The great news for MSPs is that that activity is especially strong among channel-focused vendors.

Kaseya is one of the most active companies enhancing the cybersecurity side of its portfolios. Recent acquisitions include RocketCyber, an MDR and SOC provider, and Graphus, which offers a cloud-based email security and phishing defense platform. Those purchases add to Kaseya’s growing cybersecurity footprint, including ID Agent, Unitrends MSP, and IT Glue.

Another vendor upping its defensive game is ConnectWise. After the 2019 assimilation of Continuum and its NOC, SOC, and helpdesk portfolio, the PSA platform provider added Perch Security and StratoZen to its line card last November. Doubling down with threat detection and SIEM-as-a-Service gives ConnectWise partners a more formidable set of cybersecurity tools.

Ramping Up M&A in 2021

While some of the big players in the managed services space are playing the long game, a number of other channel companies have stepped up their acquisition activities in the past few weeks. For example, Cofense, a PDR solution provider, purchased email security company Cyberfish on April 7th.

MSSP Alerts emphasized that this acquisition was the 223rd deal of 2021 (just a little more than four months into the year)! That number continues to rise, and although not all of the M&A activity is cybersecurity-related, these technologies drive a large percentage of the new investments.  

Rounding out the month was a mega-deal involving Proofpoint. Executives agreed to sell the company to Thoma Bravo, the private equity investment firm with current or former ties to ConnectWise, Barracuda, SolarWinds, Sophos, and SonicWall. At approximately $12.3 billion, it will become the largest private equity cloud transaction and further emphasize the rising value of cybersecurity.  

Signs Point to MSP Benefits

These deals don’t just affect large enterprise companies. The “little people” benefit, too, as this trend of increasing cybersecurity investments emphasizes a larger focus on partner ecosystems. With customer expectations shifting from product and point solution delivery to enabling positive outcomes in the workplace, vendors are reevaluating their offerings, innovating, and delivering more solutions through MSPs and MSSPs. This well-funded network of collaborative cybersecurity organizations is providing IT services firms with more competitive advantages. 

MSPs can easily add features and fill gaps in their stack with this plethora of new and complementary technologies. Value-adding partnerships also allow IT providers to enter adjacent markets without the intensive process of developing and marketing a new product. 

M&A can also benefit MSPs on the sales and marketing side. With restrictive budgets, providers can tap into MDP funds and engineering resources from these well-funded vendor partners to help land new clients. Larger companies typically have deeper pockets. With this further financial support, service providers can expand and innovate their solutions stacks and strengthen client support programs to boost customer satisfaction and retention.

Take the Next Steps

Cybersecurity is not just an area of growth for IT services firms but an urgent need for your clients that is sure to evolve and increase in importance in the coming years. The recent M&A investments back up that assertion.

Many SMBs don’t have the time to manage IT issues while also focusing on revenue-generating activities such as improving customer experience and increasing engagement. Others don’t have the capacity or cannot afford to hire full-time experts. MSPs with cybersecurity skills are in high demand, just like the vendors that investors are targeting with greater regularity. No matter what end of the supply chain you find yourself on today, network and data protection is the place to be.   

Now is the time for MSPs to take charge. Investing in cybersecurity isn’t just an option for big vendors, but for companies like yours, as well!


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