One thing about our current economic situation is that it is forcing good people and good MSPs to have to make hard choices. Since late 2008, I've witnessed a lot of companies go through some difficult times; while the managed services industry continues to grow there are still hard times and choices ahead of us. While the decision to sell your company is aways an important one, having the right facts is critical to making the right decision at the right time. Here are some things everyone should be thinking about at this point in our economy.
Lenders aren't Lending: whether it is the new financial regulation law or skittish banks, traditional lending sources are less inclined to make loans to businesses. Even healthy MSPs are reporting more difficulty getting loans. This is causing otherwise healthy MSPs to have to restrict their growth due to lacking resources.
Taxes are going up! Next year, unless congress acts, the so called Bush tax cuts will expire, allowing the marginal rate, capital gains, and a slew of other individual and corporate tax rates increase. It's no secret that increased taxes on MSPs will only serve to stifle growth and prosperity in this industry.
Increased Regulation: regardless of whether you approve of the recent laws passed in Washington D.C. it is unmistakable that buried within these laws are regulations that will cause MSPs great hardship to comply with these often complex and difficult to understand rules.
As the healthcare, financial reform, and other laws come into effect, only then will we truly understand their true impact on businesses large and small. I am asked more frequently each day by MSPs about whether they should sell their business. Honestly, the answer for each person and company is different. What is true for everyone, however, is that each MSP must have a M&A strategy in place should they need it. Do you have a M&A strategy for your business?
