ConnectWise Exec Teaches MSPs How To Conquer M&A Chaos

‘What you don’t want in this context is to mess up things for clients. Do not mess up things for employees. And do not break processes that are currently working,’ Matt Topper, security evangelist at ConnectWise, tells an audience of MSPs at XChange 2023..


Mergers or acquisitions can be a chaotic experience for MSPs, but proper planning can ease the impact on employees, customers and management.

That’s the word from Matt Topper, security evangelist at ConnectWise, who told an audience of MSPs at this week’s XChange August 2023 conference that while he enjoys the challenges of complex processes, they are best avoided as much as possible when it comes to mergers and acquisitions.

The XChange August 2023 conference is hosted by CRN parent The Channel Company.

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Topper, a security professional who managed security at Capstone Information Technologies, Iconic IT and Gradient MSP before becoming ConnectWise’s senior security evangelist, said he loves chaos and complexity.

“For me, there’s nothing quite like entering the arena of complexity, finding the path through, and successfully coming out the other side,” he said.

However, when it comes to the feeling of security an MSP or its customers want when a merger or acquisition takes place, Topper said there are several key things an MSP needs to do to make the merger as smooth as possible for all involved.

Three “Anchors” To Successfully Manage M&A Chaos

Based on his own experience, both via acquisitions and working with the former HTG solution provider peer group, which in 2018 was acquired by ConnectWise and renamed IT Nation, there are three key anchors to help MSPs managed the chaos and execute a successful merger or acquisition.

The first anchor is do no harm, Topper said.

“What you don’t want in this context is to mess up things for clients,” he said. “Do not mess up things for employees. And do not break processes that are currently working.”

The second anchor is to talk about the positive benefits of the merger, Topper said.

“So when you’re talking to clients, and you’re talking to employees, and you’re talking to vendors about this, what’s in it for them?” he said. “And don’t think financial. That’s an obvious motive,” he added.

The third anchor is to re-establish the flow state, Topper said.

“What is the flow state?” he said. “Have you ever gotten into your office, started working at 8:00 in the morning, and then by the time you checked again, it was 4:00 in the afternoon? That was a productive day. Do you feel like you were in the zone, when time is flying by? That’s flow state.”

Flow state is normally attributed to individuals, but it can be attributed to departments or business units or different locations in a merger. And when you go through the chaos that merger started, that is disrupting the flow state, he said.

Everyone has different perspectives about the chaos of a merger or acquisition, Topper said. Employees are wired to be thinking whether they have a job going forward, customers are concerned about whether they need to look for someone else to take over their services, and managers are concerned about where they will be in the new pecking order and who owns the processes.

“You end up in chaos, with different ideas and different perspectives and different problems,” he said.

Eight Things MSPs Need To Address To Avoid M&A Chaos

Topper laid out a path, not a blueprint, of eight things MSPs need to address to mitigate the chaos of a merger or acquisition, including:

* Internal readiness

* Customer conversations

* Re-establish trust

* Merging the communications processes, as in email

* Operating alignment

* Technology expertise, or the merging of internal systems

* Operational uniformity

* Peripheral portfolios, things still in the systems but haven’t been used for years

Topper called out four of those points—internal readiness, customer conversations, technical expertise and operational uniformity—as the most critical part of that path.

On the internal readiness side, Topper said it is important have frank conversations with employees and customers before they hear about a merger or acquisition before it was announced. Employees need to be assured that they will still have their jobs, but the conversations don’t need to address raises or promotions, he said.

“Try to do it in person, if you can, but at the very least nobody wants to get the email that says, ‘Hey, everybody, we’re merging tomorrow.’ And share the path. Share what this is going to look like to your employees. They want this to work. They have questions.”

It is also important to tell everyone at the same time, either in person or via a videoconference, Topper said.

“You are merging multiple companies together,” he said. “One of the worst things to do is to tell one half of the organization at 10:00 a.m. and the other half the next day. They know each other and they’ll talk and make empty promises. It should be pretty obvious your integrity is the most important metric for employees.”

The workforce will change after a merger, Topper said.

“Accept the fact that some employees are going to leave,” he said. “You will not keep every employee.”

The second key point is client communications, which is the importance of communicating clearly to employees how to discuss the merger with their customers, Topper said

“Your employees, when you think about having these conversations, they’re thinking, ‘What am I allowed to talk about? What am I allowed to say? What would they ask about?’” he said. “Make sure your employees know what to say.”

Cusromers will be concerned about a lot of things when their service provider is acquired by or merges with another, Topper said. Those concerns include the possibility that prices will increase, whether their services will decrease or become more generic, and how billing will change, he said.

“Billing in these types of transition are extraordinarily complicated,” he said. “Tax issues, how revenue is getting calculated, if your business units are independent. … They’re concerned internally about how that’s all going to work out.”

It is important to contact customers directly and to be honest about what’s going to change, Topper said.

“If you’re talking to clients, and you say there’s going to be absolutely zero changes from this, you’re setting them up for disappointment later, and they are more likely to leave,” he said. “And we did that with some clients. We mistakenly reassured them that everything was going to be the same. The reality is, we’re changing our entire business. There will be changes. Accept that, and expect some clients to leave, just like some employees. The ones who are going to leave will leave early.”

Also, Topper said, don’t let the technical staff have these customer conversations.

“I know in some cases we have that mythical tech that can be their own account manager,” he said. “Maybe that guy’s OK. But this is what you are there for. And so are your competitors there. It’s your company. Have the conversation yourself. Break the news yourself. And do not promise that nothing will change. Things will change. And if you’ve told the client that nothing’s going to change, they’re going to be mad at you later.”

The third key thing to consider is technology, which Topper said can be the most chaotic part of the entire integration.

“There is a massive amount of chaos,” he said. “Part of it isn’t actually detectable. There’s a lot of political chaos in this, too. That was something I didn’t expect. The employees are thinking during the system coming together, there are some times when the service isn’t working. They’re saying, ‘I don’t have access to anything.’”

Often, it is not clear who is in charge of some system, Topper said.

“They don’t know where to go,” he said. “They’re thinking, ‘What do you mean I don’t have admin rights.? But if you’re going through this process, there’s going to be a big shock.”

Customers also worry when systems change, but an MSP’s goal should be to make everything transparent to them, Topper said.

“They should still calling the same phone number for support even though behind the scenes they are arriving at a new location,” he said. “Email should be the same. … To your managers, this turns into a political football.”

The reality is that all the technologies will have to be standardized, with PSA integration being one of the most difficult. Topper said. PSA integration projects can take an entire year, he said.

“And remember, you have to fix it,” he said. “And it’s going to be one person’s choice, and not the other person’s choice. You’ll hear things like, ‘I don’t like this. Why don’t you do it like I was used to? Why does it have to be their way? Why can’t they change?’ “Just be prepared for that.”

The fourth key part of a successful merger is operational uniformity, primarily a focus on gluing the processes of the merged companies together, Topper said.

“Employees are thinking, ‘Things were working before. Why are we changing methods? Why can’t they make the change? We like our processes,’” he said. “Clients are thinking … what is all this?”

Managers also become concerned with losing process control, Topper said.

“It used to be if we want to change how we’re going to do projects, [the manager] just decided to do it,” he said. “Now that there isn’t a consensus, it’s a big adjustment for managers who are used to dealing on their own island.”

It’s important to remember that processes do not solve for 100 percent of issues, Topper said.

“It’s tempting for us to try and make a process that fits every business, with giant flowcharts,” he said. “But there’s a massive list of qualifications and edge cases where it just doesn’t work. That means you have to use multiple inputs.”

Instead, centralize some processes, Topper said.

“Think about,what can we do with the cross-location support,” he said. “Tell the client, ‘Hey, Rochester guys are busy. We can call somebody on the West Coast now. We have extended hours.”

It is also important to not throw “grenades,” Topper said.

“Don’t say, ‘Hey, guys, starting tomorrow, you’re doing this process,’” he said. That’s a grenade throw. … Move slowly and make sure that whatever you’re about to change, don’t break something that’s working. Don’t throw any grenades.”

Topper covered a lot of information relevant to managing the intricacies of merging a company during his keynote, said Frank Huston, CEO of Essential Net Solutions, a Rockledge, Fla.-based solution provider that made an acquisition 15 years ago but is currently evaluating others.

“For us, the surprises were finding out operationally the perception of how we do business. … What we found was, there were people involved in the process that were choke points. So as we started ramping up, we started finding things that wouldn’t work unless Joe was there, or Mary was there, or whatever. That was our biggest surprise.”