Running your business News
MSPs And Private Equity: What Makes An MSP Stand Out From The Pack?
Joseph F. Kovar
‘I think cultural fit is something that is extremely important. And in terms of the technical stuff, we look from a customer perspective at what customers want. We want to see really good retention rates. We want to see a diverse customer base,’ says Briton Burge, principal at Rosewood Private Investments.
Don’t Forget The Exit Strategy
Muehlberger said that, assuming that DSM is not the first company a private equity firm purchases, it is important to know who is in the company’s portfolio already.
“Are these companies that you can leverage?” he said. “Are these companies in a similar business? Do they give you bigger footprint? Can you cross-sell this product either way? Because at the end of the day, what you want to do is get margins up. And how do you do this? Sell more efficiently. And that has been the big driver for us.”
The second piece, Muehlberger said, is the exit strategy.
“Because at some point in time, all these funds will dissolve and they get paid out,” he said. “So what is the length of time for this? Are you ready to do this at the end? Or are you just selling it because you want to retire?”
“In our case, we were getting the investment to build,” he said. “So we have a very specific focus and specific time requirements as to what we need over the next few years to do that. And last, but not least, is the willingness of the PE firm to continue to work with you after the acquisition. If we want buy somebody else, if we find something else, if we need significant infrastructure improvements, will they work with us?”
