Running your MSP business is already filled with risk — risk that increases as you approach retirement age. Many MSP owners spend decades building their businesses only to find that operational challenges scale as their companies grow. Increased competition, evolving cybersecurity standards, and changing market conditions can add stress that makes retirement feel like a distant dream. For many business owners, partnering with an operationally mature and financially stable MSP may be the best move for protecting their business and ensuring financial security.
Making the Case to Partner with a Larger MSP
There are many advantages of consolidation for MSP owners. Joining forces allows you to “take some chips off the table” while reducing the complexity and risk associated with running the same business solo. You can leverage the stability of an established partner while securing the future you’ve worked so hard for.
Here are some of the advantages:
- Reduced Operational Pressure: Joining a larger, more mature MSP offers you access to proven systems, larger teams, and better resources. This eliminates the pressure of running every aspect of the business yourself.
- Financial Security and Retirement Readiness: Selling part or all of your MSP to a larger entity offers the opportunity to lock in financial security before the market becomes saturated with aging sellers. More sellers means lower multiples and buyers that can set less favorable terms.
- Reversing Burnout: When you join a larger MSP, you can usually choose the role you’d like. This allows you to enjoy doing things that you find challenging and interesting.
- Eliminate the Risk of Forced Sale: As a small MSP, a serious health issue, marriage breakdown, or other personal situation could coerce you to sell. This could happen suddenly, before you’ve prepared for an exit. A forced sale often results in less favorable terms for the seller.
Learn from the Best
When Ian Richardson sold Doberman Technologies, he was convinced that his MSP exit would be his only exit. The now founder and principal consultant with Fox & Crow Group at the time was in his mid-30s and did not enjoy running his rapidly growing business.
Carrie Richardson
However, Richardson developed a passion for strategic planning when he installed a strategic operating system in his MSP. He wanted to pursue that goal but believed his MSP needed to hit a specific number for him to exit. After choosing to exit early, he now has both a nest egg and a thriving consulting practice he loves. He also sold his MSP at a favorable time, avoiding many of the pitfalls that could have arisen had he waited.
Operationally Mature Buyers Make Good Partners
Larger MSPs often have a depth of experience and infrastructure that smaller MSPs struggle to match. Joining forces with a well-established MSP offers several benefits:
- Stability During Transition: A larger MSP typically has well-established processes for managing acquisitions. They are better prepared for a smooth transition, meaning your clients are more likely to stay. Thus, the value of your deal remains intact.
- Risk Mitigation: Running an MSP means being responsible for clients’ cybersecurity and IT infrastructure — tasks that have grown more complex in recent years. Partnering with an experienced MSP can mitigate the risk of a disastrous security incident that could hurt your company’s valuation as well as your financial future.
Protect What You’ve Built
If you are ready to reduce the risks and stress of running a business alone, now is the time to consider joining forces with a larger, more experienced company. It’s a step that can secure your financial future and protect your retirement. It may also give you the freedom to choose how you’ll spend your days by moving the tasks you don’t enjoy onto someone else’s desk.
Carrie Richardson is a partner at Fox and Crow Group LLC. If you’re looking to learn more about your options, visit mspexit.com, a Fox and Crow Group educational resource for M&A opportunities in the IT channel. For more great insights, check out Fox & Crow Group’s author page here.
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