It’s Too Late to Sell Your MSP By The End of the Year
If you want to sell your MSP before the end of 2018, it is probably too late. The decision to sell your MSP practice is an important one and must be done with the right information and the right reasons.
Now, if you are desperate and have a legitimate need to make a quick exit (family illness, personal tragedy, etc.) are reasons why I've seen MSPs make a sudden dash for the exit sign. But, aside from these hopefully uncommon occurrences, most MSPs should strive to plan their M&A exit and not react to it. Here are some reasons why.
Take Control of Your M&A Strategy
The first rule of M&A is if you want to sell, you should control the timing. That means you dictate when your company becomes "for sale." This simple step can help you manage the entire process and start from a position of strength. Whenever a buyer approaches you, there is a strong element of defense you must play to achieve a good outcome.
If you decide the timing of when your company goes up for sale, you get to allocate time for cleaning up your managed services practice. M&A preparation includes necessary housecleaning chores like cleaning up your accounting, paying off long-term debts, amping up your sales, improving service margins, etc.
All these are important and can impact your MSP's valuation. When you control the timing of your company's sale, you buy yourself time to identify and fix these issues before the buyer sees them.
Every M&A deal has unique momentum. I've seen many deals fall apart due to apathy or general neglect. It doesn't mean anything terrible happened, just that the parties both became less enamored with one another and decided against a deal.
When a seller is not the party initiating M&A talks, there is a loss of momentum which is difficult to get back. You lose the ability to shop other offers effectively. You play a game started by another player, and you can end up playing by their rules instead of your own.
Momentum is vital in the M&A world. Make sure you decide when the game starts.
Finally, when a buyer approaches you, you are at a disadvantage because you won't have as much time to put your pieces on the board. What does this mean?
Selling your company is not an overnight process. M&A deals take time to plan, execute, and then cultivate after closing. All of this takes proper resources. Tax, accounting, legal, and even outside advisors to help you navigate the M&A process while you focus on your business are beneficial to executing a successful M&A strategy.
Sell Your MSP in 2019? Start Planning Now
If you want to sell your company, you should realistically plan on a sale date of sometime in late 2019. Such a strategy will give you enough time to start planning now and make enough business corrections today y so that you can put your company up for sale and get the maximum value possible.
I say all of this not to tell you to walk away from every buyer that approaches you. It could be beneficial to know what level of interest there is in your company and even what others are willing to pay for it. However, these benefits do not outweigh the disadvantages of being in control of the sale of your company, including the timing, pacing, value, and strategy of how you make a significant life and career decisions.