MSP Exit: Everyone Exits from their MSP.
By Ian Richardson, Principal Consultant, Fox & Crow
“Everyone exits from their MSP, either horizontally or vertically.”
Arlin Sorensen from ConnectWise is fond of that line. Full disclosure, I may have paraphrased it. I remember the first time hearing it, it was a showstopper for me. I started to think about “my number” I would need after work has passed. Fast forward to today. Post many business exits (my own and others), there’s another quote that rings true.
“Run your business like you want to sell it tomorrow.”
(Thanks Israel Lang) Part of that mentality? Be prepared to sell.
Let’s talk about how to do that.
Preparing for your MSP Exit
Preparing to sell your MSP is like getting ready to sell your house. You’ll want to figure out what you can get for it (what’s it worth to the market). Get a list together of the odds and ends that you can fix to optimize your value. Fix the stuff you’re willing to fix (either by yourself, or with help). Put it out there for sale. Get as many offers as you can. Negotiate back and forth. Choose a buyer, sign LOI, get through due diligence (the “home inspection”), and close the deal. Easy… right?
Yeah, I didn’t think so either.
Our sister company, Richardson & Richardson, has prepared an e-book called “MSP Exits” to help with this. This book walks through each of the steps I listed above in detail. You can use it to help get your MSP ready to sell, as well as maximize the return to you and your family when you do. Preparing to exit your MSP makes your MSP exit way easier.
You can get a copy of the book by visiting here.
The book isn’t us shooting off our mouths. It stems from hours of conversations with industry leaders from across the MSP space. All of those leaders have been involved with MSP exits. That collective knowledge is distilled into the most important items. We took those items, organized them, and wrote the book to help the channel.
Another key item is to get your “data room” together.
MSP Exit Data Rooms
A data room is a fun concept from back “pre-computer.” When you put your company on the market, you needed data. Your key data around its operations got collected. You put it into a file room for review by potential buyers. This “data room” was usually housed at a lawyer or accountant’s office. You controlled access to the sensitive data that a buyer needed.
These days, these rooms are electronic. Despite the change in venue, it’s no less a chore to collect the data needed for analysis.
You’ll need information on your MSP, including:
- Financials
- Legal (Contracts, Organizational Documents, Schedules, etc.)
- Taxes
- Human Resources (Policies, Procedures, Payroll & Benefits, Practices)
- Customers (Agreements, Relationship Details, Adherence to standards)
- Employees (Skillset, Education, Background)
- Technology (Vendors, Solutions, Capabilities, Risks)
- Operations (Processes, Product Catalog, Metrics, and data)
- Your business plan and strategy, forecasts, budgets
- And a ton more…
If it sounds overwhelming, it is. Due Diligence and data rooms suck. They’re stressful to get through. Part of that stress stems from the time limit. You’re usually asked to start collecting after you get an offer. There is a time limit associated with said collection.
But that stress is avoidable. We have a data room product. It can help you get your information together BEFORE you even go to the market with your MSP. You can learn more here.
If you’re thinking all this sounds like a lot – we can help. Grab time with us at https://foxcrowgroup.com/contact. Let’s talk about how we can help you prepare, package, and sell you MSP to the right buyer for the right value.
