Guest Column | June 25, 2018

MSPs: Making The Most Of An Acquisition

By John Flores, Converge Technology Partners

Vertical Communications merger

There are many merger or acquisition opportunities when you’re a managed service provider. I should know — my company, a national platform of regionally focused IT infrastructure firms in the U.S. and Canada, recently expanded to add KeyInfo and BlueChipTek to our West Coast footprint.

For a small team, it can seem a bit scary when you start weighing the possibilities of a significant M&A move. All change is difficult, and change that will fundamentally alter the company for which you’ve worked late nights and spent weeks on the road can be especially jarring.

Changes that happen as part of a merger or acquisition can make your business stronger in the long run. There are market conditions and customer demands that are easier to meet as part of a larger organization. Following are three considerations we took into account during our acquisition talks, as well as how teams react better to them as part of a larger group.

Clients Want To Deal With Fewer Vendors

There are multiple reasons why customers might want to limit their vendor list. First, if a company trusts a provider, it makes sense they would want to do more business with them. If a managed service provider is helping a company successfully use the cloud for primary storage, that customer might lean toward them for cloud-based disaster recovery.

Next, there’s the need to simplify IT in general. With IT budgets seemingly becoming tighter by the year, IT resources are already strained. Add in a tight labor market and making IT as simple and lean as possible can be a real differentiator. Dealing with one partner instead of three adds efficiency. Customers deal with fewer salespeople, fewer helpdesks, and fewer billing departments.

Clients Are Looking For More From Their MSPs

At the same time clients are looking for simplified IT departments, they’re also looking for expanded capabilities. More and more companies are investigating technologies such as blockchain. There’s a better chance you can offer those capabilities as part of your overall service platform as part of a larger organization.

Expanded capabilities include strengthening your resources in different territories. Perhaps there’s a potential client you couldn’t land because you didn’t quite have the resources to serve some of the regions they’re in. As part of a larger organization, geographic coverage becomes less of an issue; If you aren’t in a particular area, perhaps one of your sister companies is.

There’s a third way MSPs can expand their offerings with mergers and that’s through hardware and software competencies. Your business might be especially strong when it comes to server products, while another business in your group may have strong knowledge in networking technology. Being able to go to market with expertise in multiple manufacturers is a real competitive advantage.

Recruiting Top Talent Has Never Been More Difficult

Whether in Silicon Valley or virtually anywhere across the country, competition for the top IT talent is fierce. If you’re a service provider looking to grow quickly, this can be a limiting factor.

Being part of a larger organization allows you to offer more in terms of professional development to your current and future employees. You are often freer to make investments in training and education, and may be able to offer more competitive salaries and benefits packages. This is a huge plus when it comes to attracting and keeping employees.

In fact, just being part of a larger organization can offer peace of mind to potential recruits. After all, in the IT industry many have experienced the ups — and potential downs — of the startup life. Just being able to confidently tell people you’ll be in business in five years has value when you’re trying to hire.

One factor that’s difficult to quantify, but is definitely real, is buzz. When a merger or acquisition happens, the companies’ names are often in the news. Your company now has more potential to grow, more capabilities, and is more prominent. You might also have more partnerships with prominent vendors and more recognition in the market. When you’re competing against the giants for talent, this can give you a leg up.

There’s no doubt about it — hearing your company is the subject of merger or acquisition talk can be scary. There’s a flip side, however: It’s extremely exciting. The best mergers and acquisitions make all involved stronger, offer better working conditions to employees, and let you provide more and better services to customers.

About The Author

John Flores is the executive vice president, of marketing and strategic alliances at Converge Technology Partners, Inc. The company is building a national platform of regionally focused IT infrastructure firms in the US and Canada by connecting best of breed services and solutions to clients. Most recently, it acquired Key Information Systems in Agoura Hills, CA and BlueChipTek, in the San Francisco Bay area.