ConnectWise has acquired Service Leadership, a leading managed services consultancy and provider of MSP benchmarking data.
Terms of the transaction were not disclosed.
Founded and led by CEO Paul Dippell, Service Leadership is best known for its Service Leadership Index, a pool of regularly updated financial performance metrics from thousands of MSPs, and SLIQ, an accompanying self-serve web application that measures users against top-performing peers and provides a roadmap for improving operational maturity and profitability. Combining those resources with ConnectWise’s product family and IT Nation partner community will result in a differentiating value proposition for current and future partners, according to Chris Timms, executive vice president of growth at ConnectWise.
“This is a very strategic acquisition,” he says. “We really feel that Service Leadership brings a very unique ability for our partners to access business critical insights to be able to understand signal from noise.”
For Dippell, who will continue to lead Service Leadership, joining ConnectWise will help a small organization deliver insights and advice to a far greater population of MSPs. “We’re just 10 people peddling really fast,” he says of his current operation.
ConnectWise plans to spend approximately the next six months certifying its customer success managers on Service Leadership tools and techniques, so they can provide the kind of analysis and recommendations that only Dippell and a few associates can deliver today.
“Over time, the intent is to build out the things that Service Leadership provides in our business intelligence software, so that we can make it frictionless, seamless, for our partners to really be able to get to their best operational maturity levels and the dimensions they need to improve upon,” Timms says.
SLIQ users, meanwhile, will eventually gain the ability to import data from ConnectWise software directly into that tool. “There’s going to be some opt-in buttons in our system [saying], ‘leverage your ConnectWise data here,'” Dippell explains.
Service Leadership will continue serving existing and future clients exactly as it has in the past, Dippell emphasizes. “They’ll continue to interact with us the way that they do. They’ll continue to get the services that we provide.”
They can also continue using whatever combination of RMM, PSA, and other line-of-business software they rely on now. “There’s no requirement to be a ConnectWise partner to continue to use or adopt Service Leadership services,” Dippell says. “It’s an open ecosystem.”
Dippell points MSPs skeptical of that openness to IT Nation Evolve, the peer group organization, formerly known as HTG Peer Groups, that ConnectWise acquired in 2018. “In Evolve today, there is no requirement to be a ConnectWise user,” he says.
ConnectWise does, however, expect integration between its software and Service Leadership’s assets to be a compelling reason for MSPs to become ConnectWise users.
“Over time, we do strongly feel that ConnectWise and Service Leadership, as we start to combine some of these elements, will provide a very unique opportunity in the market for our partners,” he says.
Service Leadership clients, the company says, increase their valuation 37%, on average, and add four points of profit to their bottom line by embracing best practices employed by the top quartile of MSPs in its benchmarking database. Those market leading service providers earn about 2.6x the EBITDA of median peers, regardless of company size, age, owner compensation, client profile, and vendor selections.
The sale announced today comes roughly two years after Service Leadership began seeking an acquisition partner. “About a dozen key industry players” expressed interest, according to Dippell, who assessed their offers based on the quality of their software, the size of their partner base, and how well a potential buyer would treat his employees and customers. ConnectWise scored highest in that evaluation.
“If you look at the sort of founding DNA of the two companies, it matches,” says Dippell, noting that both he and ConnectWise founder Arnie Bellini are former MSPs. In addition, many Service Leadership customers already use ConnectWise solutions. “There’s a pretty good overlap between our benchmark and SLIQ clients and the ConnectWise partner population,” he says.
Dippell now reports to Timms, whose organization is responsible for corporate strategy, M&A transactions, and organic growth planning, as well as ConnectWise’s partner ecosystem and online third-party software marketplace.
ConnectWise last made acquisition news in November, when it purchased Perch Security and StratoZen in connection with another strategic initiative to build wide-ranging security capabilities into its portfolio.
