ON THE HORIZON
GETTING YOUR MSP
M & A READY
Whether You See M & A Activity As Part Of Your Growth Plan Or Your Eventual Exit
There ’ s no denying the rising consolidation trend in the world of MSPs . If you follow channel news outlets , you ’ ll hear about a new deal happening nearly every week . In fact , in 2019 , Channel Futures found that roughly half of all MSPs were at least considering a merger or acquisition in the next 12 – 24 months . So , whether you are planning to grow your MSP by way of a merger or acquisition , are considering how to make your eventual exit , or simply want to ensure that you ’ re operating your business in a way that strategically maximizes the value of your business , now is the time
HELPING MSPS TO
MORE
Close More Business Offer More Services Keep More Customers to get your MSP ready for mergers and acquisitions ( M & A ).
“ Every growing industry that ’ s fragmented eventually starts to consolidate ,” explains Jim Lippie , senior vice president of MSP partner development at Kaseya . Lippie has an extensive history with MSP development and M & As , including time as the CEO of an MSP purchased by Staples in 2006 , the first MSP acquisition in the space to a Fortune 100 company . “ Take a look at the office products industry for example — once upon a time , every town had an independent office products store , but when Staples launched in 1986 and then OfficeMax in 1988 , they lapped up small stationary stores around the country , and today , they ’ ve consolidated the market . Bookstores , hardware stores , and even pet supply stores have all gone much the same way .
“ At this point , there are well over 50,000 MSPs worldwide . The vast majority of those MSPs are between 5 – 15 employees and produce $ 1 –$ 3 million in revenue , and then there are a few dozen MSPs that have demonstrated more significant benefits of scale , which creates a fertile environment for consolidation , which is one of the reasons we have seen an influx of private equity investment into the space over the last few years — and that trend will only accelerate in the coming years ,” says Lippie .
With that understanding , every MSP should determine how they ’ re going to position their business . Does an MSP acquire additional MSPs to develop scale , sell to those looking for quality businesses , merge with other MSPs to also gain the benefits of scale , or become so vertically specialized that the bigger guys can ’ t touch you in your area of expertise ? In any case , it ’ s going to be critical for every MSP to select a path , develop a strategy , and execute a plan .
To Buy Or To Sell ?
The reality is that the paths to preparedness for buying and selling look much the same . There are key foundational requirements to follow that make MSPs either desirable to acquire or put them in a position to be able to acquire other MSPs . Even though the roads look similar , size is often a good indicator of which direction you should lean . Where your MSP is right now will influence your path quite a bit , but whichever