Featuring: Chris Hoose, VP of Finance, Matt Lee, Director of Technology, David Leeper Director of Integration.
Recently, Integris leaders had an interview with valued partner Pax8 for their Wingman Webinar, What’s My Worth? The topic was one that Integris is familiar with: mergers and acquisitions.
How Did Integris Become a Thought Leader in the Mergers and Acquisitions Space?
Integris started as four smaller MSPs, each with its own challenges in trying to stay afloat in a world of larger MSPs.
After many heartfelt discussions about keeping each individual company relevant and thriving in a “Big MSP” world, the leaders decided to merge and form one larger company. Once they merged, they could centralize their marketing efforts with a dedicated marketing team headed by a VP of Marketing, as well as a dedicated sales team and a VP of Sales to train them in best practices and The Iconic Way. This would help the newly formed business continue to grow after the merger.
The decision was made early on to continue to acquire smaller MSPs as part of a longer-term vision. One of Integris’s recent acquisitions was made before the company had even finalized its own merger.
Some Things to Consider When Acquiring an MSP
Before diving headfirst into mergers and acquisitions, take a few minutes to create a profile of your “dream acquisition.” What would that look like concerning core values, work culture, profitability, and the ease of the process of merging?
When looking for MSPs to acquire, Integris has a strict profile and a unique set of qualifiers, seeking:
- Growing companies with organic, sustainable growth over a several year span
- Reoccurring services with a reliable client-base between 50 to 70%
- Client diversification with several industries represented
- Service gross margin of 50%
- Similar stacks and solutions to Integris to reduce the integration timeline
Mergers and Acquisitions: What Does Integration Look Like?
You’ll need to assess the companies to understand how they will fit with each other. Can everyone fit into one work culture?
When acquiring an MSP, there should not be any visible disruption to existing customers on either side during mergers and acquisitions. The aim is to maintain a stellar experience for existing clients throughout the transaction.
Understanding the impact of mergers and acquisitions on both the clients and the employees of the affected MSPs takes time. Integris prefers to make changes gradually, over a period of 30 to 90 days. This allows both companies to focus purposefully on learning as much as possible about each other.
How Do You Measure Company Work Culture? Due Diligence
Interview key employees to see how they will mesh within your own culture and take the time to get to know the owner. The business owner drives the MSPs culture; what the owner believes will most likely shape the company itself, including its vision, goals, attitudes, and culture.
Integris leadership had already taken the time to know each other both as peers in the professional setting as well as friends, so they already knew the companies would merge flawlessly.
Mergers and Acquisitions: Seller Beware
One word of caution for MSPs looking to be acquired: there is no doubt that opportunistic buyers will take advantage of the fear and uncertainty in the current marketplace. Take the time and wait for a good company who will want to deal fairly, pay market price, and make sure both sides are satisfied with the acquisition. Ultimately, Integris predicts that this “good guy” mindset will prevail and create a stronger MSP industry.
Considering Partnering Up for Mergers and Acquisitions?
If you’re considering being acquired in the future, start focusing on a few key concepts now:
- Integris’s Chris Hoose, VP of financing, suggests focusing on numbers; is there revenue growth, or the potential for revenue growth? Chris suggests, “Showing double digit revenue growth is a great goal, with 15% being a good margin.”
- Make sure your larger clients are willing to be transferred to the new entity and will come along with your company.
- Make sure your company is diversified, with interests in several industries.
- Matt Lee, Director of Technology, suggests that an MSP looking to be acquired should be transparent and keep an open mind through the process. “Be genuine,” Matt urges.
Mergers and Acquisitions Are a Lot of Work with a Lot of Rewards
David Leeper, Director of Integration, acknowledges, “It’s a lot of work, but well worth doing. The importance of a successful acquisition is due diligence on both sides; again, hard work but with a lot of reward. Also, keep a professional attitude.” David laughs, “Don’t be a jerk in the negotiations!” He goes on to explain, “Ultimately, we want our current MSP clients on both sides to be cared for, feel included, and be nurtured.”
Did you know Integris’s thought leaders are available for your next event, webinar, or panel? Contact us now and book a speaker to take your event from “yawn” to “wow!”
