“ Customers can leave for reasons out of your control. It’ s a risk that you can’ t totally mitigate.”
WHEN IS THE RIGHT TIME TO REVEAL YOUR MAGIC NUMBER?
Sahyoun, who has participated in 70 MSP deals, says some sellers bring up price right away while others wait until later in negotiations.
“ Both can be fine,” he says. Broaching the subject early can expedite the process. A seller unafraid to reveal the number up front demonstrates confidence, he says, but some prefer to feel out the buyer before revealing too much.
Cissel, who has participated in 57 M & A deals, prefers to get it out in the open from the get-go. It shows right away whether the seller is realistic, he says.“ It’ s one of the first questions that I tell buyers to ask sellers:‘ What do you think your business is worth right now?’”
Kotler sees it differently:“ Keep that to yourself until the buyer has done some diligence and can indicate a valuation range. Once they present you with a range, you can choose to reveal your number.”
You also want to let the buyer know if you intend to stay with the business. Cissel says it’ s OK to admit you want out because you’ re burned out.“ I had one owner tell me on a Monday morning,‘ Right now, for a used bag of golf balls, you can have my company.’”
Sahyoun says Evergreen usually has a successor in mind for the seller, so whether the seller stays or leaves has no impact on closing the deal.
Of course, not all buyers share that view. When Frank DeBenedetto was selling his MSP business, a prospective buyer walked away because he wanted out. DeBenedetto, who now heads Kaseya’ s M & A Concierge program, eventually sold the business to Evergreen.
DON’ T BE STUPID WITH YOUR MONEY POST-SALE
Even if you walk away from the sale with your magic number, Cissel cautions that you will need a money management plan. He’ s seen too many sellers make mistakes and advises getting help from a financial planner. He stresses,“ Don’ t be stupid with your money.”
Pedro Pereira is a 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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