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MSP Acquisition: Datapath Acquires Valley Network Solutions

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Datapath CEO David Darmstandle
Datapath CEO David Darmstandler

Datapath has acquired Valley Network Solutions, essentially uniting two MSPs in California's Central Valley region and doubling the IT service provider's size to about 65 employees. Financial terms were not disclosed.

The combined company's core focus areas include IT consulting, managed services and multi-layer cybersecurity. Core vertical markets include agribusiness, K-12 and higher education, manufacturers, and mid-size professional service organizations.

Datapath also hosts coding camps and associated efforts -- dubbed CodeX and Lemonade Day Modesto -- to mentor young entrepreneurs.

Describing the M&A deal, Datapath CEO and co-founder David Darmstandler pointed to regional gains and talent gains from the business combination. In a prepared statement he said:

“Adding an office in Fresno, staffed with very knowledgeable technical experts, not only expands our footprint, but also greatly improves our ability to support clients with multiple locations throughout the Central Valley. The new Fresno location provides immense opportunity for Datapath, enabling our customers up and down the state to benefit from additional resources and solutions, including enterprise-grade managed security.”

Datapath was a $6.2 million company back in 2015 or so, according to the Inc. 5000 list for 2016. The company surfaced on the Inc. 5000 list for six consecutive years, and Datapath had a three-year growth rate of 95.94 percent as of 2016. More recent figures have not been disclosed.

This is the latest in a lengthy list of MSP acquisitions we've tracked this year. On a somewhat related note, tech industry M&A activity in the first quarter of 2018 rose from the same quarter in 2017.

Demographics (i.e., aging business owners) and market shifts (particularly around cloud services, security and recurring revenues) should drive MSP-related M&A activity higher through at least 2022, ChannelE2E estimates.