CHAMPION MINDSET CONT.
a forgotten server is discovered that they can disconnect.“ We audit them in the first month and half,” says Ward.“ We want to know right away what we’ re getting into.”
Onboarding should include a plan prioritizing tasks and a budget for the next 12 to 36 months. Cissel likes to provide a one-page visual with instructions on how to work with the new MSP.
Another critical part of onboarding, he notes, is collecting customer data for the helpdesk team to provide excellent service when the customer needs it.
Cissel also recommends having the acquired customers sign your contract and MSA as you start migrating them, which typically takes 12 to 18 months. Get customers on your billing platform as soon as possible to get them used to seeing your logo, he adds.
Don’ t Rush to Raise Prices
Often, the acquired MSP’ s prices are too low. So you’ ll have to decide whether to raise them or eat the cost of maintaining them— at least for a while. Experienced MSPs advise the latter approach. Give customers a chance to acclimate to the new tech stack, billing platform, and service protocols before asking for more money. Raise prices too fast, and customers tend to walk.
“ The customer is not a spreadsheet where we’ re adding 20 %,” says Ward.“ If we raise prices, we are going to add value for the customer.” That means adding services such as 24 / 7 support, better visibility into ticket resolution, and providing a better tech stack. In one case, Ward notes, PCS provided a data forensics solution to a customer that the acquired MSP didn’ t offer.“ No one wants to pay more for the same service they have experienced for years,” he notes.
Thornton advises waiting 12 months to raise prices. First you have to earn the customers’ trust by pointing out gaps in their technology and security coverage.“ We provide a pricing option to fill those gaps, but rather than pushing sales, we are coming from an advisory standpoint and only doing our due diligence by bringing it to their attention,” he explains.
Acquirers typically want to avoid chasing customers away, but Cissel argues some customers aren’ t worth keeping. He’ d rather focus on the more profitable customers, especially those generating margins of 55 % or more. For those at the bottom, let them know they will eventually have to pay more to be on a more secure technology stack and that“ may scare them away,” Cissel says.“ You can’ t go into this thinking you’ re not going to lose customers.”
Communicate – But Don’ t Overwhelm
Despite your best efforts to welcome acquired customers into the fold, change is difficult. Thornton says he learned the hard way not to overwhelm acquired customers with too much information.
“ Don’ t announce too much change too quickly,” he advises. A lot of work goes on behind the scenes after an acquisition, and customers don’ t need to know everything, he notes. While communication is essential, it has to be effective.
M & A Do’ s and Don’ ts
With some 60 mergers and acquisitions under his belt, Cissel likes to joke that he’ s made every mistake possible. But mistakes are part of learning, and they’ ve helped him define, and refine, his approach.
“ Definitely don’ t equivocate on your policies and processes. The company you bought needs to know and conform to your policies and processes, and, therefore, your acquired customers need to know them too. If you equivocate, your customers don’ t know how to interact with you and they feel orphaned,” he says.
Cissel and Ward stress the importance of due diligence. Cissel recommends holding a whiteboard session to compare prices between acquirer and acquiree. If your pricing is triple the target company’ s, it may be too difficult to do a pricing uplift to enough customers to make the deal financially beneficial.
Ward says mistakes to avoid include ignoring customer concerns, making sudden changes without explanation, reducing the number of support staff, and overpromising.
Bottom line: in M & A, clarity, consistency, and customer care are nonnegotiable. Do your homework, set expectations early, and avoid changes that leave clients feeling like the deal was their loss.
Pedro Pereira is a writer in New Hampshire who has covered the IT channel for two decades. He has worked for a variety of media companies, including Ziff Davis, CMP Media, The Nielsen Company, and daily newspapers.
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