nimsoft_acquisitionA few weeks ago, Nimsoft CEO Gary Read told me that a new acquisition opportunity crossed his desk every day. Now, Read is pulling the trigger on a managed services-oriented deal that will give Nimsoft's monitoring software new network discovery, topology and root cause analysis capabilities. Here are the early details on the deal, and my thoughts on additional MSP software market consolidation.

Nimsoft's Read and I are scheduled to speak later today (update: Here's the resulting podcast with Read). In the meantime, the deal involves Nimsoft purchasing the intellectual property assets of Cittio Inc., which had specialized in automated network and systems monitoring software. Financial terms of the deal were not disclosed. Nimsoft will also hire several former Cittio engineers.

According to a Nimsoft press release that will hit the wires today:
The purchase, which includes extended capabilities in the areas of layer2/layer3 network discovery, topology mapping and root cause analysis, will enable Nimsoft to rapidly deliver these advanced capabilities within its core products, further strengthening its ability to monitor the performance and availability of an organization’s entire physical, virtual and cloud infrastructure.
For managed service providers, Nimsoft's IP acquisition highlights a growing trend in the market. Many small MSPs got their start remotely monitoring and maintaining notebooks, PCs and servers.

But Nimsoft and rivals such as PacketTrap Networks Inc. are evangelizing network-centric managed services. (Ingram Micro agreed to start distributing PackTrap MSP4.0 in April.) Other rivals, such as Level Platforms, are promoting MSP software to manage cloud services and hosted applications such as Microsoft Business Productivity Online Suite. Ultimately, the days of MSPs merely managing PCs are over.

Buyer's Market?

With the economy in mind, more MSP-oriented acquisitions must be immenent.

Generally speaking, the managed services software market remains highly fragmented. Multiple competitors enjoyed rapid growth before the credit crunch began in September/October 2008. Now, I suspect growth rates are slowing in the MSP software market.

Some privately MSP software companies are unable to raise more money. Others had hoped to launch initial public offerings, but the IPO market has gone into a deep chill during the recession.

Taken together, those factors could drive down software company valuations and make some businesses ripe for takeover.

MSPmentor is updated multiple times daily. Follow us via RSS, Facebook and Twitter. And subscribe to our enewsletter, webcasts and Resource Center.