Where is the Great MSP M&A Wave?

More Buyers Than Sellers

Here we depart from rumor and enter into reality. If you still believe that there has been or will be a consolidation of MSPs I ask you this question: why are there more buyers than sellers? It is true that there are many MSPs (and other entities) who are eager to buy companies with managed services capabilities. The odd thing is there are clearly more buyers than sellers.

While it is commonly said that every company has its price, there is an obvious separation between those MSPs who want to sell and the larger majority of MSPs who want to buy. In my opinion, there are far more buyers than sellers and that tells me a lot about the state of affairs in the managed services profession today.

My views on MSP valuations are well known to anyone who reads this blog or has seen me talk. For the vast majority of MSP owners, the future holds a great deal of promise and growth. This is the only reason I can think of for why there aren't more sellers out there. When approached by the typical buyer, many MSPs will reject the offer and opt instead for continuing their path towards the future.

Explanation of Major MSP Acquisitions

If you are wondering why there have been some significant MSP deals over the last few years, there are some easy explanations for why they happened. Whether you are talking about the mindSHIFT, Thrive Networks, All Covered, or another MSP purchase, the purchasing companies were always seeking to acquire MSP capabilities where they had none previously. The buyers were also publicly traded entities who had plenty of cash to make such deals happen. It is also worth mentioning that these acquisitions (at least the mindSHIFT and Thrive) ended up unraveling (see my analysis on each of these acquisitions elsewhere on this blog).

I am a big believe in mergers and acquisitions when appropriate. I am not, however, a believer in creating false expectations. If you ask the average MSP owner, they would probably reject a proposal to buy their company. Whether they do so because the valuation is too low, the cash insufficient, or the terms too risky, MSPs are choosing to stay in the profession and wait. By my reckoning, this means things are looking pretty good for MSPs and the future.