General Datatech LP is readying for a new future after taking a step that's a first for the company: an outside investment.
The technology firm, whose history dates back to 1996, took funding from an affiliate of Miami-based H.I.G. Capital. According to Tom Ducatelli, CEO of General Datatech LP, the move also came with a majority stake or GDT.
Among Dallas-area firms, this isn't a small company, and it has nearly 700 employees – and its revenue last year topped $1 billion. Excluding acquisitions, the company traditionally grows at least 10% year-over-year, the company said.
Yet the time was right for the company, Ducatelli said. General Datatech, which provides technology services for corporate clients, sees potential for more growth with H.I.G. as it looks to acquisitions and organic expansion in a massive market.
"There's a tremendous opportunity for us to take market share," Ducatelli said. "And it's almost an endless opportunity to renew the technologies to introduce to our clients to help them be more efficient."
H.I.G. approached the company about two years ago, and it took some time with the deal wrapping up in the second half of last year, Ducatelli said.
"It's not a decision that was taken lightly, and there's a lot of vetting on both sides," he said. "Does it make sense? What are the goals? What are the objectives? What's the growth strategy?"
Ducatelli gave more of his thoughts on the company and the deal:
Can you talk more about what you do as a company?
We provide network, data center, cloud, managed to host and managed services for businesses across the U.S. and U.S.-based companies that have global requirements. So we provide that single point of contact. We do everything from the assessment to advisory services to designing IT solutions, implementation, and ongoing management. Our core focus is dealing with the tier one OEMs — Cisco, HPE, Dell, VMware, and all other ecosystem partners that support network infrastructure, security, data center, and managed services.
Why take your first outside investment?
We were approached by H.I.G. They're experts in the IP solutions business. From an investment standpoint as a PE firm, they have an incredible track record of integrating companies, getting great valuations out of them, and expanding the business. And at that point in our growth trajectory, it made sense to partner to grow at the speed, at the pace that we wanted to. So our chairman, J.W. Roberts, made the decision.
You've had some nice numbers.
We've had a lot of success in implementing organic growth. And we believe that we can accelerate that, particularly in areas that our clients are asking us to grow into. We can grow faster by bolting on other specialized organizations and grow faster than you can if you do it organically.
Why make the change at this point?
You hit an inflection point where you decide, "What's the heavy lifting requirement to get to the next billion-dollar level organically? What is that going to take in terms of both sweat equity and incremental investments?" And we decided that it made more sense to be able to partner and add the expertise of H.I.G. — and their industry knowledge of what organizations would be potentially available to integrate, to partner with, to acquire, to accelerate. It's a very, very competitive market right now in the M&A space.
So, monetary help and expertise?
It was combined. They're finding early-stage companies that may be interested in their own exit. And they're able to bring that to GDT, and we evaluate companies. And without that expertise and partnership of a solid PE firm, we would be spending way more of our time doing our own due diligence versus focused on running the business and growing the business organically.
This interview has been edited for brevity and clarity.
