“ If the values , culture , and priorities are aligned , everything goes smoothly , and you avoid the disruption of losing employees
and clients .” - Joanna Mirov
would have been one of our best financial deals ,” Medwed says , “ because the CEO of the company we were talking to was not someone who we wanted to work with daily .”
Medwed joined Meriplex after selling his MSP practice , Preferred Technology Solutions , to the company . Shortly thereafter , he became the company ’ s M & A lead . “ In approximately three years , I was instrumental in purchasing 11 high-quality MSPs ,” he says .
Joanna Mirov , senior advisor of M & A at Ntiva , an IT services company with offices across the United States , also stresses the importance of shared values between the buyer and seller . “ If the values , culture , and priorities are aligned ,” says Mirov , “ everything goes smoothly , and you avoid the disruption of losing employees and clients .”
Be Clear About Your Involvement ( Or Non Involvement ) For Post Sale
Setting expectations is critical in M & A deals , making it easier for both parties to plan ahead . Wagner encourages buyers and sellers to reach an understanding about what happens to the seller ’ s CEO post-sale . Sellers , she says , need to ask themselves these key questions : Do I want to stay on , and what does that look like ? What does my day look like when I become an employee as opposed to the owner ?
Mirov , who sold her MSP business after 17 years to her current employer , is living proof of the need to plan ahead . “ I was so busy with making sure my clients and staff were taken care of that I forgot about myself ,” she recalls . “ Luckily , Ntiva worked with me on this process , but I should have thought this through way in advance . The acquisition process is very involved and takes time .”
Knowing the selling CEO ’ s role in advance can affect the terms of the sale too . A CEO planning to stay may agree to take less money up front in favor of an earnout based on business goals .
Avoid These Pitfalls
As when two people start dating , the desire to impress is strong . Early on , one company may be so enamored of the other that it will be tempted to overlook red flags .
This can be avoided with planning and transparency , says Wagner . Sellers should review all aspects of the business that could derail a deal . For instance , are customer and vendor contracts assignable ? If not , a potential seller should change those terms before even starting the M & A process . Other areas to “ clean up ,” says Wagner , include separating items such as charities and vehicles from business accounts . And don ’ t forget payroll . Wagner has seen some unusual arrangements , including having a nanny on the payroll .
Sellers also need an accurate picture of the buyer . Mirov says her experience with Ntiva was positive for her and her staff . Says Mirov , “ They had a playbook and walked me through the process .”
Early in the process , Mirov and Ntiva ’ s leadership did a joint presentation for the staff . “ People were super excited about the new opportunities and joining a company that had a lot of potential for growth ,” she says . Only two of her staff of 40 opted out .
Specific Red Flags To Watch For
Red flags to look for in a buyer include if leadership teams from previous acquisitions don ’ t stay on post-sale and turnover is high , says Mirov . Also watch how a potential acquirer treats the M & A process .
“ Several CEOs would only have remote conversations or , even worse , call you from [ their ] car ,” she says . “ This is one of the biggest decisions of your life . You want the buyer to treat you with respect . It was important to me that the CEO of the company interested in buying my MSP would spend the time with me in person getting to know me , my company , and my goals .”
Medwed warns about potential buyers who send letters-of-intent to tie up a company . “ Then , after the seller ’ s CEO has invested a great deal of effort and energy to close the deal ,” he says , “ the buyer lowers the offer significantly .”
At Meriplex , he says , this doesn ’ t happen because the company understands the importance of long-term relationships and keeping the staff happy . “ We want the new teammates to be able to go home to their families on acquisition day excited ,” Medwed says , “ to be able to look deeply into their loved ones ’ eyes and say , ‘ This is good for me , good for our family , and [ for ] our future .’”
Pedro Pereira is a freelance writer in New Hampshire who has covered the IT channel for two decades . Pedro has worked for a variety of media companies , including Ziff Davis , CMP Media , The Nielsen Company , and daily newspapers .
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