In addition to vendor discussions and technical presentations, the big keynote session of day two was all about laying the groundwork for mergers and acquisitions.
With the explosive growth and interest in the MSP and MSSP market, private equity firms are buying MSPs at an unprecendented rate. It’s important to understand how the investment world is looking at the industry. For the mainstage mergers and acquisitions session, David Weeks was joined by five players in the space to discuss how they view the market, their strategies, and how they support MSPs. This was followed by an extensive Q&A session.
Here’s a quick recap of what the speakers covered:
Key elements of M&A
AME Group president Brent Williams set out three considerations for MSPs:
- Key motivations, such as extending geographic reach, expanding existing markets, and bringing onboard new offerings
- How to make a successful M&A, including having a clear ownership vision, a well-defined business model, a clear target customer profile, well-structured pricing models, and great people
- How to build a business’s value through business models (for example, recurring revenue is more valuable than ad hoc revenue), consistency in offerings, current contract agreements, organized books, and staff development
Options for structuring and acquisition
New Charter Technologies CEO Mitch Morgan and Dan Ruhl of Oval Partners set out the advantages and disadvantages of various strategic alternatives for acquisitions—from full buyouts to some of the more nontraditional options.
Doing things differently
Evergreen Services Group Head of M&A Ramsey Sahyoun provided a very different perspective. As a group of MSPs organized into six regional platform companies, backed with $250 million equity capital, they offer a more flexible approach focused on fostering growth in their chosen partners. They have spoken to thousands of MSPs and select the very best in the industry to help develop their businesses. Since launching in December of 2017, they have completed 28 MSP acquisitions to date.
Boosting your valuation
Focus Investment Banking managing director and MSP team leader Abe Garver presented five things MSPs can do to increase valution, including:
- Join a peer group (i.e., TruMethods, Taylor Business Group)
- Benchmark your business against the rest of the industry
- Be open to merging with a peer group company to increase EBITDA and valuation multiples, rolling-over equity in the acquirer for a “second bite of the apple,” and selling several years prior to retirement
Building for scale
Abhishek Rampuria of M/C Partners talked through how the business has built and scaled multiple MSP platforms that, combined, have completed over 17 add-on acquisitions since 2016.
To help you understand the market in more detail, we’ll be covering more on M&As on our blog over the coming weeks and months, with many of our acquisition partners writing in more depth about their areas of expertise. If you’re looking at the next stage for your MSP business, watch out for that!
Elsewhere there were vendor discussions with Cisco, Falanx Cyber, SentinelOne, and a focus on creating new services through an N-able™ N-central® and Microsoft 365 partnership.
The pick of our technical presentations included Data Recovery with Eric Harless and Carrie Reber, and EDR: Tips, Tricks, and Best Practices with Security Head Nerd Lewis Pope.
Don’t miss out on tomorrow’s fun, including TAP Tank: Services with our technology alliance partners, talks from Zomentum, Flexis, and Siemplify, and more technical and business insights to help drive your MSP forward.