M & A SERIES
Avoid A Rude Awakening
HOW TO CLOSE THE VALUATION GAP BETWEEN WHAT YOUR MSP IS WORTH TODAY AND WHAT YOU WANT TO SELL IT FOR
BY PEDRO PEREIRA
W hen it comes time to sell your MSP business, do you have a“ magic number” in mind?
Whether you’ re planning to jet-set around the world during retirement, live comfortably and take an occasional tropical vacation, or launch another business, you may face a rude awakening if there’ s a big gap between your number and the market price.
You have two choices: Accept the buyer’ s offer and scale back your goals, or work to increase your valuation before you sell.
If you choose the latter, it can be done, but you may need to recruit new clients, add services, and perhaps fire some people.
“ Your MSP is an asset that is worth what the market says it’ s worth,” says Josh Kotler, an operating partner at Axial Reade Capital and former MSP.“ Many things factor into a market valuation, and the answer typically changes from buyer to buyer. What you get to decide is whether or not to sell it.”
HOW MUCH DO YOU NEED TO CLOSE THE GAP?
Selling is easy if you’ re happy with the market price, but typically there’ s a gap that you’ ll need to close.
If you plan to retire, closing that gap is key to a more comfortable life post-sale, says Paul Cissel, CEO of Growth Caddie, M & A Expert in Residence for TMT, and
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