The 20 MSP Grows With Three Acquisitions In California, Michigan

‘I think we moved a little slow in the past. I think we can do 25 acquisitions a year. And we’re going to prepare for that 25 being the low bar. I think we can do upwards of 40 in a year. We already did 41 in 36 months. Now we’ve added three more. I will just step up pace a little bit,’ says The 20 MSP CEO Tim Conkle.

The 20 MSP, a managed service provider with a business model that includes attracting independent MSPs to join with their peers to share a common technology stack and common business practices, on Monday said it has acquired three of those firms.

The acquisitions of Novi, Mich.-based Red Level Group; Roseville, Calif.-based iStreet Solutions; and Santa Clarita, Calif.-based InData Consulting now give Plano, Texas-based The 20 MSP a total of 44 acquisitions in only three years.

The 20 MSP has a unique business model in that, while being an MSP itself, it also offers its platform and processes to a larger group of about 175 other MSPs, most of whom are small with revenue in the million-dollar range. The 20 MSP CEO Tim Conkle told CRN that joining his group gives MSPs the ability to operate more efficiently than if they built their stack and processes on their own.

The 20 MSP currently counts about 175 MSPs as members of the group, a number that has been stable for some time, Conkle said.

“We bought three MSPs in the group, and we just got three new members last week,” he said. “Those three came in whether or not we made the acquisitions. We naturally have around 175 MSPs in the group. But I’m going to push that number up to

600. Now, why am I going to do that? Well, because I think we moved a little slow in the past. I think we can do 25 acquisitions a year. And we’re going to prepare for that 25 being the low bar. I think we can do upwards of 40 in a year. We already did 41 in 36 months. Now we’ve added three more. I will just step up the pace a little bit.”

A group of 600 MSPs working together is not only a larger potential pool of acquisitions for The 20 MSP, Conkle said.

“It’s also a very healthy community,” he said. “It’s time for MSPs to stretch their legs. For MSPs, it’s better together. I’ve said this for a long time. If you took 50 MSPs that each had a million dollars in top line revenue and 40 percent EBITDA, which is $200,000 at a 5x multiple, they’re worth a million dollars each by themselves. With those same 50 MSPs, at the stroke of a pen, I create $100 million out of thin air. The question is, who wants to share? Answer: those 50 MSPs. And I’ve said this for a long time, we’re just better together. MSPs are better together. We’re more valuable together. We’re better serviced together, the whole ball of wax.”

Red Level Group is The 20 MSP’s third acquisition in the Detroit area. It is also the company’s largest acquisition, Conkle said.

“This was a strategic acquisition giving us a bigger footprint in Detroit,” he said. “And it came with an incredible team. There’s about 20 people coming with that company. I’m gonna say something I don’t say a lot, but that company was well over $10 million in revenue. We’ve typically acquired companies in the $1 million to $6 million revenue range. That’s the sweet spot. And so we stretched a little bit on this. It was a member of our group, and so it made sense.”

Red Level Group owners—David King, Robert Tessanne, and Edward Aube—are all staying with The 20 MSP, Conkle said, although he couldn’t say what their exact roles will be. “But they will have a big role in continuing to grow in Michigan,” he said.

The acquisition happened because the owners heard Conkle’s message about how MSPs can grow faster as part of a larger organization. “And I think it just hit the right the right chord,” he said.

Red Level brings intellectual property in the software world, Conkle said.

“I think we got five applications with that company that over time they built for different customers,” he said. “And we’ll try to see where that’ll fit with many of our other customer bases.”

The InData Consulting acquisition expands The 20 MSP’s footprint in the Los Angeles area as well as expanding its presence in Arizona, Conkle said.

iStreet gives The 20 MSP its first footprint in the Sacramento, Calif. area, Conkle said.

“Sacramento speaks for itself,” he said. “We don’t have a footprint there. I want a footprint there, and so we just moved into a new geography.”

The 20 MSP ultimately wants to have a footprint in every U.S. state, Conkle said. The company is also considering an international expansion starting with Canada, he said.

“Canada would be our natural next step,” he said. “We’ve got a pretty nice membership in Canada. So it would really be just a function of rolling Canada up, not a function of, ‘Hey, we got to go find some stuff in Canada.’ There’ll be some entity stuff that has to be set up for Canada. Canada has some rules and laws that we would have to deal with. But outside of that, I see Canada as our natural next step to expand outside the United States.”