Thinking About Selling Your MSP in 2022? Here’s How to Vet Potential Buyers

No matter how passionate a business owner might be or successful it is at supporting its customers, there may come a time in the lifecycle of a business that the business owner may look to sell.

This transition is happening more and more in the managed services provider (MSP) world. In 2021, more than 718 acquisitions of MSPs have been announced as of November, with more than a month left to go until the end of the year for potentially more announcements. This growth can be attributed in part to the rise in importance of the MSP business model, as well as the desire for more services capabilities from every business type.

There are a number of potential buyers that could look to purchase an MSP. A buyer might be an individual who might simply look to take over the existing business. It may also be a competitor looking to expand their customer base or to complement their existing geography or technology specialties. Private equity has also become an increasing buyer of MSP businesses in the last few years.

The next step is to determine an appropriate valuation for the business. This is a tricky calculation for an MSP, as there are many factors that can help determine valuation depending on the buyer and the business itself. Two primary indicators are net profit percentage and total overall profit, with higher values typically leading to a higher valuation. Buyers may also look at overall revenue makeup, recurring revenue percentages and overall growth patterns.

The process of selling a business can take a few weeks, or even take months or years. The timeline ultimately comes down to finding the right alignment between buyer and seller, both on the financial aspects as well as the softer, more business oriented pieces. But, when a good match is found it can create powerful outcomes for both sides.

Though it might not be on the mind of many MSP business leaders just starting out in their business, the sale of a business is a natural part of the lifecycle for many types of organizations. By asking the right questions and carefully navigating the process, a business owner can ensure the best outcome for all involved – including the buyer, the owner, its customers and its employees.

About MSP Corp

MSP Corp understands that you’ve worked hard to build your business and you want to protect it. With a mission to be a world-class business partner for MSP owners across Canada, we actively seek to acquire and partner with owners looking to secure the value of the business they have built and provide a seamless exit process that ensures business continuity and employee and client stability.

Contact us today to learn more about selling your business and maximizing its value.