Xceptional, a managed IT services provider (MSP) in San Diego, is seeking to acquire MSPs that have gross annual revenues of $500,000 to $2.5 million, with a heavy concentration of recurring IT support contracts and subscriptions-based revenue, the company says.

Xceptional did not mention preferred EBITDA profit margins for acquisition, investment and partnership targets.

Xceptional disclosed the acquisition and investment strategy today. The details surface only a few weeks after Xceptional first revealed plans for an investment fund to build strategic partnerships, investments and acquisitions in the MSP sector.

Potential Cities for MSP Acquisitions, Investments

Among the additional details and variables for MSPs to keep in mind:

1. Geography: Xceptional is focusing its M&A effort on such areas as:

  • Southern California (San Diego, Orange, Riverside, LA counties);
  • Northern California;
  • Las Vegas, Nevada;
  • Park City, Utah;
  • Denver, Colorado;
  • Boise, Idaho;
  • Phoenix, Arizona

2. MSP Talent: Xceptional is expecting to "retain personnel" and "management," which suggests sellers shouldn't be looking to run for an exit, post-deal.

MSP Valuations and Xceptional's Fund Size

Xceptional has not disclosed the size of its investment fund, nor has the MSP revealed individuals or financial organizations that may be involved in the fund. Moreover, the company has not disclosed target valuations for investments, strategic alliances and acquisitions.

In a prepared statement about the M&A strategy, Xceptional CEO Chris McKewon said:

“Based on market research and recent conversations with clients and partners, clients want to work with knowledgeable, skilled, and proactive managed solution providers. They seek partners that can deliver tangible results and value and organizations that can understand the nuances of their business, industry, IT systems, and customers. We believe Xceptional can bring that type of customer experience to the region, so we are looking to broaden our reach into the market and for opportunities to innovate and expand our portfolio of services and solutions.”

MSPs seeking to discuss Xceptional's strategy and a potential strategic partnership combinations should contact Xceptional Chairman, COO and CFO Larry Johnes ([email protected]), the company says.