40 Acquisitions In Under 3 Years: The 20 MSP Continues Its Roll-up

‘When somebody becomes a member [of The 20 Group], they have to transition 60 [percent] or 70 percent of their company into our tool stack and all that stuff. I doubt there's any MSP that has integrated more companies than The 20 has as just a function of integration. This means those MSPs standardize on one way of doing business. So we're literally integrating well before we buy them, which makes it easy. That integration, that standardization, happens whether the company is planning on being acquired or not,’ says Tim Conkle, The 20 MSP founder and CEO.

The 20 MSP, a managed services provider building a national footprint via a large series of acquisitions, on Tuesday unveiled its 40th acquisition in under three years, and said it could see up to 10 more by year-end.

Tim Conkle, founder and CEO of Plano, Texas-based The 20 MSP, told CRN that the acquisition of Boston-based ADC is aimed at helping scale his company’s services capabilities in the Boston area.

“We'll get a couple really good employees out of it that we need in Boston right now,” Conkle (pictured) said. “This will do a couple things. One, it will obviously increase that area’s revenue. It'll be a nice buy, but, in the same breath, it's strategically good for us. … It will stretch our capacity. I think they have a really, really good team. It’s a pretty small acquisition, but a really cool one.”

Conkle declined to discuss the financial details of the latest acquisition.

ADC is The 20 MSP’s 40th acquisition in about 33 months. Like the previous 39 acquisitions, ADC was a member of The 20 Group, a community of MSPs who commit to using the same processes and software stack to provide managed services. The 20 Group typically has 175 to 200 MSPs as members and continually recruits new members to take the place of those that are acquired by The 20 MSP.

“ADC is a member of The 20 Group,” he said. “It’s another member that we rolled up, so you know it's gonna be good. The cool thing about this one is number 40, and we did that in 33 months. That's a really cool dynamic. “

The 20 Group is really an MSP transition machine, Conkle said.

“When somebody becomes a member, they have to transition 60 [percent] or 70 percent of their company into our tool stack and all that stuff,” he said. “I doubt there's any MSP that has integrated more companies than The 20 has as just a function of integration. This means those MSPs standardize on one way of doing business. So we're literally integrating well before we buy them, which makes it easy. That integration, that standardization, happens whether the company is planning on being acquired or not. It’s just part of being the 20, becoming part of the ecosystem. And as they become part of the ecosystem, they get to a point where they may be interested in rolling up into The 20 MSP.”

Once an MSP has standardized on The 20 Group stack and processes, it may approach The 20 MSP about getting acquired, or vice versa, Conkle said.

“In this case, ADC reached out to us,” he said. “They were ready to roll up. So that was cool. They were ready, and we rolled them us. And you’ll see us continue to stick to plan.”

Conkle declined to discuss The 20 MSP’s revenue, but did say that it is the largest founder-owned business in the MSP space, and that it has not yet taken private equity investment.

“I still own a big majority of the company, and the only people that are in the box with me are people I've rolled up,” he said. “Everybody would love we keep our financials under wraps, kind of like everybody else does, because when at some point you get ready to do something, you don't want people to sniff it out before it's time. Although they're already sniffing.”

The 20 MSP is also in no hurry for an IPO, although it will happen someday, Conkle said.

“I'm having too much fun,” he said. “[However,] I think the only way that we build wealth, not only for myself but for the members that roll up with me, is to have some cadence of selling the company every three to five years. We're between the ‘three’ and ‘five’ right now. Three years in. So somewhere in the next two years, I think we will definitely sell, probably to a PE firm. And everybody will derisk, leave some in, rinse, repeat, rinse, repeat, rinse, repeat.”

The 20 MSP has made acquisitions for the purpose of gaining new skillsets, new geographies, and personnel. Conkle said future acquisitions will often be focused on scale, but it is looking at new technical skillsets, which he declined to discuss.

However, Conkle said, the company in general has been building its AI practice.

“When talking about AI, a lot of people think about it from a line of business application,” he said. “MSPs are not gonna play in that field because business applications require spending millions and billions of dollars integrating it. So where's the money for MSPs in AI? What is the low-hanging fruit that moves the needle? How do you package it? How do you deliver it? We know our customers are going to want it. So the big open field for most MSPs right now is efficiency. How can you take something that takes time now and alleviate that time? You're never going to compete against software manufacturers on that.

This might include such areas as faster employee on-boarding or improving email efficiency, Conkle said.

“I get over 2,500 emails a day,” he said. “How do I get through 2,500 emails? AI. How do I figure out how to how to respond to them all? AI. We want to take something that might take up two, three hours of time in a day and squeeze it down to 30 minutes. That's where I think MSPs can really stretch AI to actually become a viable thing to our clients.”