Selling my Managed Service Provider (MSP) in 2021/22 was a journey filled with insights, challenges, and invaluable lessons. For me, it wasn't just a business transaction; it was a learning curve that reshaped my understanding of the MSP landscape, business management, and personal growth. Here, I share the seven most significant lessons I learned through this process.
- The Value of Preparation and Organization
Preparing for the sale was a marathon, not a sprint. It was a two year exercise during which I realized the importance of having all our financial records, client contracts, MSA’s, and operational documents well-organized.
Potential buyers scrutinized everything, and having a clean, transparent record made the process smoother. Client contracts quickly proved to be the one of the most essential items to have ready – showing contracted revenue, and associated revenue sorted by contract. This preparation also gave me a clear view of my business's health, which was invaluable.
TIP: Your North Star: Your north star for the whole project of selling your business should be that the more prepared you are, the more you will sell your business for. 3 years of accounts and 2 years projections are the minimum, all position descriptions created and signed and known by team members, personal costs normalised etc. You can read more about this in my article “How to double you your business valuation" here
- Understanding My Business' True Value
Determining the value of my MSP was more complex than just looking at financial statements. I had to consider client relationships, the expertise of my team, and the stability of recurring revenues. Learning to view my business from an outsider's perspective helped me appreciate its true worth and negotiate better. It gave me confidence to ask for what we deserved, and it was a great outcome for us.
- The Significance of Legal and Financial Expertise
Hiring a good lawyer and financial advisor was one of the best decisions I made. The complexities of selling a business, including contracts, liabilities, and tax implications, are vast. Professional guidance was crucial in navigating these intricacies and avoiding costly mistakes.
- The Importance of the Right Fit
Selling to the highest bidder wasn't my priority; finding the right fit was. There were some great team members that were staying on and that legacy mattered.
The buyer's vision for the company, their business practices, service approach for customers, and how they treated employees were crucial factors. This approach ensured that my baby (the company) and the team we had built would be in good hands.
- Flexibility in Negotiations
Negotiations were a balancing act. While I had a clear idea of what I wanted, being too rigid could have scuttled the deal. Flexibility, particularly in terms of payment structures, transition support, and post-sale involvement, helped in finalizing a deal that was beneficial for both parties.
- Emotional Preparedness is Key
Letting go of a business you've built from the ground up is an emotional rollercoaster.
I underestimated the emotional attachment I had to my MSP. Preparing mentally for this separation was just as important as the financial and legal preparations. It’s vital to acknowledge and address these feelings throughout the process.
CONFESSION: The separation took nearly 6 months to hit me in its fullest form…
- Planning for Life After Sale
What comes after selling the business is often overlooked. I quickly realized the importance of having a plan for life post-sale.
Whether it's pursuing other business ventures, investing, or taking time off, having a clear vision for the future helped me transition smoothly into the next chapter of my life. As mentioned above, it took about 6 months to really sink in and an almost “sellers remorse” hit after 6 months. I had to recognise it and deal with it. So plan for this to come, and have an assigned coping strategy and support in advance.
Conclusion
Selling my MSP was more than a business transaction; it was a rich learning experience. These lessons go beyond the realm of business sales; they are life lessons about preparation, valuation, emotional intelligence, flexibility, and future planning. For anyone contemplating selling their MSP, I hope these insights pave the way for a successful and fulfilling journey. If you have any questions, I always welcome a chat on greg@zencontract.com
