{"id":23614,"date":"2022-05-18T15:38:55","date_gmt":"2022-05-18T19:38:55","guid":{"rendered":"https:\/\/www.sherweb.com\/blog\/?p=23614"},"modified":"2022-05-24T12:14:30","modified_gmt":"2022-05-24T16:14:30","slug":"mergers-acquisitions-msps","status":"publish","type":"post","link":"https:\/\/www.sherweb.com\/blog\/partner\/mergers-acquisitions-msps\/","title":{"rendered":"M&A for MSPs"},"content":{"rendered":"

Mergers and acquisitions (M&A) have been a hot topic in the channel for a while now. Economic disruptions and uncertainties in 2020 might have stalled things a bit, but activity has risen over the past year and shows no signs of slowing down<\/a>.<\/p>\n

A growing number of MSP mergers and acquisitions reflect the interests of private equity<\/a> in the channel. Managed services<\/a> are good business! Those of us who work in the MSP world know this, and now we\u2019re seeing larger organizations and investment firms take an interest. Especially during the pandemic, demand for IT services from remote work solutions<\/a> to infrastructure<\/a> to cybersecurity<\/a> has soared.<\/p>\n

Meanwhile, global IT spending<\/a>\u2014particularly in cloud computing\u2014is only going up. By extension, MSPs and IT providers in general are sitting in a great spot with respect to long-term profitability. With increased competition and staffing challenges, MSPs themselves are taking a harder look at M&A as well, with more than 25%<\/a> saying they\u2019re looking to acquire other MSPs over the next few years.<\/p>\n

No matter which way you slice it, M&A should be on your MSP\u2019s radar. Even if you\u2019re not planning to buy or sell, having a potential exit strategy or a plan for when a potential buyer comes knocking is a good idea. Chances are high you\u2019ll be hearing a lot more about MSP mergers and acquisitions in the near future.<\/p>\n

Why would an MSP consider M&A?<\/h2>\n

Other than the benefit of just being good business planning<\/a>, there are all kinds of reasons an MSP would consider a merger or acquisition. Regardless of whether or not you\u2019re looking to take over another solution provider or managed services business tomorrow, potential M&A scenarios should still be a part of your playbook.<\/p>\n

From a seller\u2019s perspective, maybe you\u2019re looking for a bigger company to help share financial burden, or want to use the profits of a sale for a new endeavour. Maybe you\u2019re simply ready to get out of the business. Either way, the M&A market could offer an attractive option for allowing your business to live on\u2014if stepping away is the path you choose to take.<\/p>\n

If you\u2019re on the buyer\u2019s side of things your motives are probably a bit different. Ultimately, you probably want to grow your business and generate more revenue<\/a>; buying or merging with another MSP can help you achieve economies of scope and scale. To the same end you might be looking to expand your portfolio<\/a>. Acquiring another MSP that specializes in the services you want to add to your stack can be a faster route to achieving your goal, as opposed to hiring the necessary talent and building out the service internally.<\/p>\n

Market saturation with increased competition is another reason MSPs consider an M&A strategy. Merger and acquisitions traditionally involve a certain level of risk. But in a market where it\u2019s increasingly harder to differentiate yourself, customer acquisition costs are rising and taking on that risk is less of a barrier. So if you\u2019re looking to consolidate market share or take on larger clients, merging with or acquiring another MSP could be your answer. Like they say, if you can\u2019t beat \u2018em, join \u2018em.<\/p>\n

What you\u2019ll need on your M&A journey<\/h2>\n

You can\u2019t just stumble blindly into the M&A market unless you want a disaster on your hands. Buyers and sellers should have several key elements in order before they get into the process and on-hand throughout their M&A journey.<\/p>\n

For buyers:<\/h3>\n