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.
One MSP’s Experience
Sitting in the audience was General Informatics’ Monistere.
Monistere told CRN his biggest piece of advice to an MSP considering being acquired is to do your homework.
“A lot of people will talk with private equity,” he said. “These guys are great at what they do. They’re really personable. They recognize that it’s really a sales process, just like we sell every day. So I would say, do your homework before you talk to the private equity company that you’re considering. Make sure that you understand the way their leadership works and how they manage and how engaged they get.”
A lot of MSPs come into those meetings thinking they want private equity firms to be hands off, Monistere said.
“I’ve found that’s not as good as if they are an actually engaged part of your board,” he said. “These guys have expertise, not just in the financial sector. A lot of the private equity companies will build teams that have MSP knowledge and technology knowledge, so that when they are involved with you they can provide you feedback and give you ideas of what kind of challenges the organization sees.”
Garver, Burge and Muehlberger showed there is a lot of mystery in terms of what MSP valuations look like or the different tiers of investment, Monistere said.
“There is quite a bit of negotiation that goes into either selling your business or acquiring another organization,” he said. “And so, I always tell people when they ask what the multiples are today, it really does depend on whether or not you are a platform company, whether or not you have some very specific intellectual property you own, and how well do you work with the private equity company or the platform company looking for add-ons that is buying you. If your culture and your direction and what you’re doing is going in that same direction, heck, they may end up buying you for more than what you thought you could get in the market.”