Webinar Series, Session 2.0

M&A Insights Key Takeaway #1: Target MSPs/TSPs with Similar Maturity Levels

Larry Cobrin
CEO & Founder
MSPCFO
Peter Kujawa
Vice President & TSP Evangelist
Service Leadership

Webinar Series, Session 2.0

M&A Insights: Target MSPs/TSPs with Similar Maturity Levels

Larry Cobrin
CEO & Founder
MSPCFO
Peter Kujawa
Vice President & TSP
Evangelist
Service Leadership

Why the Best M&A Prospects Share Operational Attributes

Peter Kujawa, Vice President of Service Leadership, a ConnectWise Solution explains why service providers seeking to acquire or be acquired should court MSPs exhibiting similar Operational Maturity Levels (OMLs).

Takeaway #1: Be Aware of Operational Maturity Disparities

Speaking with CEO Larry Cobrin on MSPCFO’s M&A Insights – Perspectives from Thought Leaders webinar series, Kujawa said that MSPs seeking to expand through acquisitions may look to purchase unprofitable or marginally profitable businesses at a discount. They believe that their higher-performing company will elevate the new firm’s profitability. A better approach, he said, is to consider MSPs that share critical attributes.

Important Considerations for M&A Compatibility to Ensure Success Over the Long Term
Company Culture  

Target Market

 

Technology Adoption

 

Staff Size and Customer Base  

Takeaway #2: Comparable Operational Maturity Levels Ease Integration

Service Leadership’s OML performance assessment and improvement tool diagnoses technology and managed service providers’ competence by analyzing answers to 150 questions measuring 40 traits. He said there is a direct correlation between OML scores and profitability. 

 

Why Having a High OML is So Significant

Over the last several quarters, companies with poor OMLs of less than 3 consistently lose money.

 

Those at 3.7 or higher rank among the most profitable, with EBITAs of 18% to 20%.

 

MSPs can boost EBITA through a number of areas MSPCFO’s software identifies like: 

Takeaway #3: Prioritize These Three Business Areas for Optimization

Service Leadership’s OML performance assessment and improvement tool diagnoses technology and managed service providers’ competence by analyzing answers to 150 questions measuring 40 traits. He said there is a direct correlation between OML scores and profitability. 

Employing proven change management, CRM, pricing, accounting, staffing, and other management best practices reduces redundancy and wasted effort, which cuts costs and increases profits.

Using itemized budgeting, forecasting, and scheduling tools to manage costs and guide capital expenditures, demonstrates fiscal responsibility that attracts buyers.

Narrowly defining a target market, precise client persona development, and meticulous adherence to marketing to that demographic shows an understanding of your niche.

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