Why IT Managed Service Provider Businesses Are Being Acquired Part 1
There is an acquisition frenzy over cloud-based technologies in the marketplace today.
If you are a business owner in this industry, this should interest you.
A primary factor is heavy demand for managed services by banks and healthcare in the light of market and regulatory changes. Second, talent scarcity and changes in consumer behavior. These are both factors contributing to heightened merger and acquisition (M&A) trends within the Managed Services Provider (MSP) industry. The MSP industry is forecasted to grow to $310 billion within the next 5 years. Within such a scenario, the best response is to be ever-ready for the upcoming opportunity – acquire or be ready to be acquired. Let’s have a look at top drivers for M&A activity:
ARE YOU A ONE STOP SERVICE PROVIDER?
IT solution providers want to provide all services to their customers, from basic IT support services to cloud solution, application integration, and cybersecurity. MSPs specializing in monitoring and managing security – MSPs or MDRs – are the most desirable targets.
RETIRING BABY BOOMERS
Business owners who have spent the last four to five decades building their companies are ready to retire. Over 12 million baby boomer owned businesses will be sold in the next 10 years, so it’s important to get to the front of the line.
GEOGRAPHIC OR MARKET DOMINANCE
MSPs are attempting to grow in certain markets or geographies to either consolidate their position or to expand their footprint in offerings.
WHAT DOES THIS MEAN FOR CURRENT MSP OWNERS?
M&A activities will continue to grow for several years and it’s important that owners remain ready for the next opportunity. If you want to prepare your business for sale or acquisition: learn more about the value of your business, different buyers–strategics, investors, employees, or others–and their value drivers.
Brent Engelbrekt is a Senior M&A Advisor with True North Mergers & Acquisitions. As a past business owner, Brent comes with a key understanding of the business sales process, knowledge acquired first-hand as a principal in several successful business and commercial real estate transactions. Learn more about Brent and his credentials by clicking here.
Email Brent directly at bengelbrekt@tnma.com