MSP Datapath Acquires MobileTek Services In Big Education Market Play

‘We‘re seeing a big gap in security, particularly in education. A large part of our business, about 60 percent, is in education, K12, with schools from about 5,000 students to about 40,000 students, which is kind of our sweet spot. And MobileTek Services, all they do is education,’ says Datapath CEO David Darmstandler.

Datapath, an MSP that has increased its education-focused services over the past couple of years, has acquired MobileTek Services, a Dublin, Ohio-based MSP focused solely on the K-12 education market.

The acquisition, which brings to Datapath four offices in Ohio, closed earlier this month, said David Darmstandler, co-founder and CEO of Modesto, Calif.-based Datapath.

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MobileTek Services is Datapath’s third acquisition, Darmstandler said.

Datapath in 2020 acquired Bright Bear, an Irvine, Calif.-based MSP that gave Datapath a solid Southern California presence along with some essential skill sets, he said.

Two years earlier, Datapath acquired Fresno, Calif.-based Valley Network Partners, or VNS.

As an MSP, Datapath manages customers’ infrastructure management, including network and server environments, and about six years ago expanded into security monitoring with its own in-house security monitoring team, Darmstandler said.

“We’re seeing a big gap in security, particularly in education,” he said. “A large part of our business, about 60 percent, is in education, K12, with schools from about 5,000 students to about 40,000 students, which is kind of our sweet spot. And MobileTek Services, all they do is education. We believe we’re going to be the first national managed service provider for education in regards to basic managed services and managed security services.”

Student data has become valuable, Darmstandler said.

“It’s now worth about four to five times adult data on the dark web,” he said. “So, yes, there’s a big security issue with schools. A lot of them, how they manage their students is by their Social Security numbers.”

Datapath first helps school manage their infrastructures, which were built to maybe handle one laptop or Chromebook per student but now have to also be ready to handle students’ mobile phones and tablets, Darmstandler said.

“And that doesn’t include the security aspect,” he said. “There is no monitoring in place, there’s no best practices. So we’re helping to standardize that in the coming years for school districts across the nation.“

With the acquisition, Datapath will see its head count increase to between 85and 90 employees, up from about 60 employees before the acquisition, Darmstandler said. The previous owners of MobileTek Services are staying on with Datapath, he said.

“They’re great guys,” he said. “We’re so pumped to have them. I think if you build a mission and vision that’s bigger than any individual, everyone gets excited. As much as we think the managed service business is becoming standardized to some degree or more better defined, it’s still the Wild West in a lot of ways.”

For Datapath, expanding its geographic base to the eastern U.S. with MobileTek Services was important, but even more important was access to MobileTek’s talent, Darmstandler said.

“We’re bringing on a larger team with different specializations, and it adds to our actual offerings and abilities for all customers across the board,” he said. “And there’s the specialization. They only serve school districts. That specialization is extremely helpful with our vision of where we want to go.”

Darmstandler declined to discuss financial details about the acquisition, but he did say that MobileTek Services was a profitable organization.

While Datapath has taken some bank debt, it has funded its acquisitions, including MobileTek Services, on its own, Darmstandler said.

“We’re trying to avoid [private equity] because this gives us full control and autonomy,” he said. “Also, we’re not rolling our culture through spreadsheets in the background. There’s nothing wrong with that, but just right now we want more autonomy to where we can build the base we need to and build the culture and maintain it the way we believe it should be. We really want to make where we work the best place we’ve all worked.”

With private equity comes pressure to show big returns that can change a company’s culture, Darmstandler said.

“And so we’re trying to avoid that for as long as we can,” he said. “I’m sure we’ll probably hit some kind of wall at some point to where it will be difficult to not take outside funding because we get to a certain size.“

After a transition time, MobileTek will be renamed Datapath, Darmstandler said.

Datapath worked with a consulting firm that identified MobileTek Services as a potential acquisition, Darmstandler said. The consulting firm also assisted in the due diligence process, he said.

Datapath is now talking with other MSPs about being acquired, he said.

“We definitely are where we have conversations open,” he said. “But they have to match in a lot of ways. Culturally is the most important. .... The deal has to make sense for the company. There has to be something that brings value to the rest of the company. In the case of Bright Bear, they had a lot of cloud expertise. And MobileTek has expertise in the industry sector where we really believe we will be the leaders.”