There is incredible demand in the market right now for acquisition in the Managed Service Provider’s (MSP) space. This week we had a chance to sit down with former business owner, now Raleigh Managing Partner, Dan Wilson to talk about movement in MSPs and opportunities for MSP owner to sell their business.
Q: Dan tell us a bit about your background and what brought you to Viking?
A: I founded an IT Service company in 2003 and rebranded and restructured into a MSP in 2006. Over the next 13 years I built the business through acquisitions X3, completed a merger and eventually exited in 2019. During the 16 years we landed on several MSP501 lists, INC5000 lists and Fast50 lists.
Q: You have a lot of success running and then selling your IT business. What made you want to make the shift?
A: Everyone has different reasons for selling, mine where originally around partner realignment and then burnout was setting in and a new challenge was needed…wanted.
Q: Why is there such a high demand for MSP acquisitions compared to previous years?
A: M&A activity in the MSP in my opinion is driven by a few things. #1 is the recurring revenue model, the more recurring the better. #2 is resistance to economic downturns. During the 08/09 timeframe I was able grow my business by over 200%. MSPs in general offer service and support at a less expense rate than having in-house expertise.
Q: What do you wish that you knew more MSP owners know as they think about selling their business?
A: Several items come to mind as I think back to the M&A activity that I was involved. #1: You must have a solid management team in place that run the Marketing, Sales, Support, Operations and Project teams. #2 Document everything. Document the roles, responsibilities, process and procedures for everything #3 Ensure your customer concentration is not heavy on your Top 5. It is extremely hard to hold on to the bigger clients as they are the ones likely to be acquired. #3 Build a marketing engine, become a marketing company that does IT service and support #4 Have solid contracts and agreements that are automatically assignable and #5 align your MSP with solid top of line vendors
Q: What do you think is the biggest opportunity out there right now for MSP’s?
A: The small MSP ($5m and under) are in high demand by the Middle Market MSPs looking to grow through acquisition and the Middle Market MSPs are in very high demand from the equity groups looking to roll several together to make 1 + 3 = 10 sort of speak.
Q: Dan, we really appreciate your time. Any parting words for MSP owners who are thinking about selling their business but not sure where to start?
A: The first step is know where you stand and that begins with a business valuation. Then from there you can understand your options and better determine your exit strategy.
About Dan Wilson: Dan Wilson comes to Viking with an extensive background in entrepreneurship and IT service and support as the previous owner and founder of Waypoint Solutions Group (rebranded and merged as Complete Network in 2017), a managed IT services provider located in North Carolina. Dan’s company held multiple awards as a five-time INC 5000 winner, an eight-time MSP501 winner (top MSP’s globally), as well as a three-time Charlotte Business Journal Fast 50 winner as one of the fastest growing companies in the Charlotte, NC area. Throughout his 16 years of entrepreneurship, Dan has experienced the facilitation and process of multiple merger and acquisition deals. His knowledge as a previous business owner gives him hands-on, firsthand experience in assisting other entrepreneurs in planning their exit strategies. Dan has seen the struggles and pitfalls surrounding the sale of a business, and he plans to make it his mission to guide and protect entrepreneurs in completing the single largest transaction of their lives.