Mergers and Acquisitions

Dataprise’s Strategic M&A Propels National Expansion in MSP Sector

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Consolidation within the managed services provider (MSP) space is growing at a near-unprecedented pace. 

Private equity investors and industry players alike are fueling a surge in mergers and acquisitions (M&A), attracted by the promise of recurring revenue models and the constant demand for sophisticated IT solutions. This has led to the rise of the platform MSP – a larger managed service provider, sometimes backed by a private equity investor, that buys up smaller MSPs and rolls them into a single, comprehensive provider. 

ChannelE2E's ongoing series looks at how these platform MSPs are shaping the industry through strategic acquisitions. Companies like The 20 MSP, Ntiva, BrightWorks IT, Evergreen, Fulcrum IT, New Charter Technologies, and Thrive have adopted various integration models, from fully rebranding acquired entities to allowing them to maintain their original identities under a unified brand umbrella.

In a sector where ownership and integration strategies are rapidly evolving, Dataprise has transformed from a relatively small regional player into a platform MSP with national reach.

A Strategic Shift to Accelerated Growth

Originally concentrated between Washington, D.C., and New York City, Dataprise has become a national player through a series of strategic acquisitions. Under the leadership of Christian Fulmino, senior vice president and head of corporate development and mergers & acquisitions, the company has completed 10 acquisitions, eight of which occurred in the past two years.

"We just closed our tenth deal on October 1, 2024" Fulmino told ChannelE2E. "We've been pretty active."

Fulmino joined Dataprise in September 2022 to spearhead the company's M&A efforts. "They were really starting to look to embark on a roll-up strategy that was going to be more of a regular cadence of M&A," he said. "They wanted to build that capability and expertise in-house."

Dataprise's growth strategy is backed by private equity firm Trinity Hunt Partners. Since Trinity Hunt's investment, the company has more than tripled its revenue, growing from approximately $40 million to over $130 million.

Targeting Well-Run, Operationally Mature MSPs

Dataprise's acquisition strategy is focused on acquiring MSPs that are already successful and operationally mature. 

"We pride ourselves on trying to find really well-run businesses," Fulmino said. "We're not buying fixer-uppers; we're buying businesses that are growing well on their own, returning nice margins on their own."

This approach ensures that the acquired companies can integrate smoothly into Dataprise's existing operations without significant overhauls or restructuring. "What we're looking to do is help them do even more," he said. "Take a bigger slice of that pie."

Building a National Presence

Through its acquisitions, Dataprise has expanded into key markets across the United States, including Los Angeles, Texas, Colorado, Arizona, North Carolina, Virginia, New York City, and Tennessee. This expansion targets the small and medium-sized business (SMB) market, which Dataprise defines as companies with 20 to 200 employees.

"The SMB part of the business really does require more of a local presence to be successful," Fulmino noted. "Despite the fact that a lot of our work can be done remotely, we've found very good success in having a local presence."

By establishing regional offices led by former MSP owners, Dataprise ensures that it retains the local expertise and client relationships crucial in the SMB sector, according to Fulmino. 

Emphasizing Cultural Fit and Operational Alignment

Like many platform MSPs, cultural alignment is a key component of Dataprise's acquisition strategy. "If you're going to do several acquisitions a year, you really have to find businesses that are culturally aligned to some degree," Fulmino said.

Dataprise brings business owners into general manager roles post-acquisition, allowing them to continue leading their regional offices while benefiting from the resources of a larger organization. "It's important for us that those leaders can sit around a table and are equals," he said. "We want business owners who can be peers, share best practices, and collaborate on overcoming obstacles—not as individual MSPs in Houston, but as part of a national MSP."

Operational maturity is also critical, enabling these leaders to effectively collaborate within the larger organization, Fulmnino added.

Efficient Due Diligence and Integration Processes

Dataprise maintains a disciplined approach to due diligence and integration, aiming for swift and efficient transitions that minimize disruption for sellers. Their deal process, from the Letter of Intent (LOI) to closing, typically spans six to eight weeks, consistent across all 10 of their acquisitions. Recognizing that the due diligence process can be intensive for business owners—many of whom are selling a business for the first time and need to keep the process confidential—Dataprise strives to reduce the burden.

"It's a huge distraction to the business owner," Fulmino acknowledged, emphasizing the importance of a concise due diligence period. "We don't want to distract them any longer than they need to be."

Post-acquisition, Dataprise implements a structured 90-day integration plan. "We believe there is real value in getting our acquired businesses onto the same ticketing system and RMM tool," Fulmino said. This fairly integrated model allows for better collaboration and efficiency across the organization.

Integration Process: Structured and Efficient

Dataprise follows a structured integration process that spans approximately 90 days. The process is broken down into phases, each focusing on different aspects of integration.

Day 1 to 30: Human Resources and Initial Transition

In the first phase, the emphasis is on human resources and administrative tasks. Employees from the acquired company are onboarded onto Dataprise's benefits programs, including health insurance and 401(k) plans. 

This immediate attention to employee welfare helps ease anxieties and fosters goodwill, according to Fulmino. Additionally, the sales teams are integrated, allowing them to access broader resources and collaborate with peers across the country. By focusing on these aspects early, Dataprise can ensure that new team members feel part of the larger organization from the outset, Fulmino said.

Day 30 to 60: Business Systems Integration

The next phase involves integrating business systems and tools. Dataprise transitions acquired companies onto its instance of ConnectWise and other remote monitoring and management (RMM) tools.

"We happen to be a ConnectWise shop," Fulmino noted. "We're going to get them onto our instance of ConnectWise; we're going to get them over to our instance of our RMM tool."

This integration enables features like 24/7 support through Dataprise's call center. Often, the businesses Dataprise acquires have local call center teams that are not staffed around the clock, Fulmino said. To provide continuous support, Dataprise redirects after-hours calls to its 24-hour call center in Port St. Lucie, Florida.

Day 60 to 90: Administrative Functions and Branding

In the final phase, Dataprise takes over administrative functions such as billing and collections, freeing up the acquired company's resources to focus on growth initiatives. Regarding branding, Dataprise initially retains the existing brand with the addition of "A Dataprise Company" to maintain client trust and continuity. Over the next few months—typically within the first six months—they transition fully to the Dataprise brand.

"Our strategy around branding is on day one, we keep the existing brand in place," Fulmino explained. "Sometime during that first six months... we're cutting away from the existing brand to Dataprise, and then that's kind of the final piece."

Retaining Talent and Enhancing Career Opportunities

Employee retention is a significant focus for Dataprise. The company offers expanded benefits and career development opportunities within a larger organization.

"We've seen amazing retention rates," Fulmino said. "We tend to have a much more robust set of benefits than they were able to get from the smaller employer."

Part of Dataprise’s success, according to Fulmino, is because the company offers employees enhanced opportunities for career advancement. He explained that smaller MSPs often face challenges in providing promotion paths for their top performers due to limited organizational structures. In companies with around 25 employees, exceptional senior engineers may find fewer higher positions available, which can impede their professional growth.

With approximately 500 U.S. employees, Dataprise provides a broader range of career paths, according to Fulmino. "There's a pretty good career progression model," he said. "We have HR business partners that are partnering with these businesses, coming in and making sure that those employees have a career path, not just a job."

Expanding Service Offerings with Proprietary Cybersecurity Solutions

Recognizing the growing importance of cybersecurity, Dataprise has invested in developing its own Security Operations Center (SOC). This move allows the company to offer tailored cybersecurity solutions rather than reselling third-party services.

"Cyber is going to continue to be the sharp tip of the spear, a good point of entry," Fulmino said. "We don't want to continue to resell... we want to be able to have our own solution that we can really tailor to our clients' needs."

Building an in-house SOC requires significant investment and scale but offers long-term advantages, Fulmino said. "It's one of those services that really requires a minimum efficient scale to do profitably," he noted. "Once you've done that, the incremental cost of adding another client to that SOC... is fairly low."

Sourcing Deals Through Relationships and Industry Presence

Dataprise identifies potential acquisitions through a combination of industry events, relationships with investment banks and brokers, and referrals from existing regional managers.

"I take speaking engagements at most of those events," Fulmino said. "Those conversations and those sessions tend to certainly attract business owners that are considering their go-forward."

Maintaining relationships with brokers and investment banks ensures Dataprise remains top of mind when suitable opportunities arise. "My team and I manage relationships with those sell-side participants," he added.

Referrals from former MSP owners now serving as regional managers have also become a powerful lead-generation tool, according to Fulmino.

However Dataprise finds them, for those MSP owners contemplating a sale, Fulmino points to the benefits of joining a larger platform like Dataprise. These can include financial gains, expanded service offerings, and career opportunities.

He points out the potential for significant wealth creation through equity rollovers. "There's a reason why high-net-worth individuals invest [in MSPs]; they regularly outperform the market," Fulmino explained. "You can get two, three, four times your investment on that 20% that you roll."

Seizing the Opportunity in a Hot Market

Fulmino acknowledges that the current favorable market conditions won't last forever and advises MSP owners to consider timing carefully.

"Nothing stays hot forever," he said. "You certainly want to sell your business when your business looks the healthiest... when you're on that upswing."

He adds that joining a larger platform can offer continued entrepreneurial opportunities. "You're still an entrepreneur; you're still invested in a business that's growing, and you have an equity stake in that," Fulmino noted. "You're just invested at a platform level, as opposed to an individual company level."

Conclusion: Dataprise's Role in MSP Consolidation

Dataprise's strategy—focusing on acquiring operationally mature MSPs and integrating them swiftly—illustrates a deliberate path in the rapidly consolidating managed services industry. By incorporating former owners into leadership roles and investing in proprietary cybersecurity solutions, the company enhances its service offerings while leveraging the strengths of its acquisitions.

Expanding from $40 million to $130 million in revenue over a three-year period, Dataprise has created significant opportunities for growth and development. As the MSP landscape continues to evolve, the company's approach underscores the potential benefits of consolidation for both MSP owners and their clients. Dataprise offers a pathway to greater resources, expanded services, and sustained growth, highlighting how strategic integration can shape the future of managed services.

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