Mergers and Acquisitions, Channel investors, Mergers and Acquisitions

Friday’s Exit Strategy: Five Most Popular MSP Merger, Acquisition, Valuation Advice Blogs

It's been roughly two months since we launched Friday's Exit Strategy -- a weekly column that highlights merger, acquisition, transition, exit and retirement advice for MSP and IT service provider owners.

The weekly blog entry, like ChannelE2E itself, has caught on. To give you a feel for what we've covered, here are the five most popular blogs in the series, along with snippets of advice they contained.

Service Leadership Inc. CEO Paul Dippell
Service Leadership Inc. CEO Paul Dippell

1. How Entrepreneurs Become Prisoners In Their Own Businesses: Chances are, you launched your business to free yourself from big, corporate, slow-moving decision making. Plus, you wanted to have some fun. But the very company you built became a prison of sorts. Here's what likely went wrong.

2. Five Traits of High Valuation MSPs: The variables include profit margins, consistency of EBITDA growth, low customer churn, strategic market penetration and intellectual property.

3. Fourteen MSP Valuation KPIs to Know: During a ChannelE2E webcast, Service Leadership Inc. CEO Paul Dippell mentioned 14 variables and KPIs that can influence an MSP's valuation.

Cogent Growth Partners CEO Rick Murphy

4. Are MSP Valuations based on EBITDA misleading?What's an IT service provider really worth? You’ll hear estimates that range anywhere from 5X to 7X annual EBITDA — with some larger service providers sporting intellectual property fetching as much as 10X EBITDA (though that’s very, very, very rare). But here's a twist: Cogent Growth Partners CEO Rick Murphy believes EBITDA talk can be misleading...

5. Negotiating Earnout Terms: You’re gearing up to sell your business. Or perhaps you’ve received a buyout offer. At some point in the process, you’ll likely need to consider earnout terms. Here's how to proceed.

That's the Top 5 list to date. Got an M&A or exit topic you'd like us to explore? Please post a comment or email me your thoughts privately. [email protected].

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.