Brianna White

Staff member
Mar 25, 2020
There have already been more than 700 MSP mergers and acquisitions in 2022, with likely exponentially more M&A conversations taking place every day. During a recent panel discussion at ChannelCon 2022, 63% of attendees said they were thinking of selling their companies, or at least wanted an option to sell. More than 40% said they are considering the purchase of another company.
But amidst all the current economic tumult, is now a good time for managed service providers to buy, sell, or should they wait it out? The answer, as you might imagine, is—it depends. It’s also not so much as when should you sell, but how and why, according to  the ChannelCon panelists in a session titled “Should You Sell or Grow? Mergers, Acquisitions and Exit Strategies for MSPs.”
“The headline news is scary, with 9% inflation, high interest rates, and signs of recession,” said John Holland, managing director of Corporate Finance Associates, an investment banking firm based in Laguna Hills, Calif. “We don’t have a crystal ball for the future, but in the IT space M&A still is very hot. We just closed a deal with a $55 million cybersecurity VAR and there were a multitude of acquirers interested. Demand for MSPs with recurring revenue is still robust. The Wall Street Journal reported recently that M&A is down compared to last year. But to keep that in perspective, last year was unusually high. It’s getting back to normal rate of transactions, rather than collapsing.”
Why Are You Buying/Selling?
Bill Moore, president of Thrive CFO, a business finance firm in Rolling Hills Estates, Calif., cited four reasons why MSPs, among other businesses, might typically look to make an acquisition:
  • In-Market Consolidation
  • New Market Expansion
  • Strategic Acquisition
  • The “Acqui-Hire
“The strategic acquisition brings in new products or services to sell to clients. Security presents that opportunity now,” Moore said. “As far as ‘Acqui-Hire,’ getting quality technicians is difficult. Some MSPs are looking to acquire a company not for its customer base, but for its technicians. They’re not just looking at the owner, but at the people and their skillset.”
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