We are often asked what the role of acquisitions is in the effort to grow more quickly – can it help with building critical mass in developing targeted capabilities? Is this how to enter new market segments? Are acquisitions the best path to expanding our portfolio of products and services?
The answer to these and many other “why acquire” questions is yes since they can be an important aspect to make a greater impact on your customers and your overall business. While the principles and models shown here and in future acquisition-focused blog posts apply to any growth-oriented MSP business, they are particularly important for those making the transition from technology product focused to customer outcomes-based MSPs.
The challenges of finding acquisitions that fit your portfolio strategy, work in the correct segment(s), provide differentiated intellectual property (IP), contribute materially to critical mass, and are available/interested in selling combine to create a constant tension between finding the best option and finding a “good enough” option. Therefore, whether your intent is to make a single acquisition or several, you must consider a broad range of options and manage this complex process holistically and dynamically – each step with one prospective acquisition may impact the attractiveness or viability of other targets.
The four-phase process shown below takes you deliberately through finding targets that fit with your strategic objectives, evaluating candidates to build a robust business case, negotiating a mutually beneficial deal structure, and finalizing the deal while mitigating critical risk factors. Following this process will help ensure that the acquired firms will propel the growth engine for your business by:
• Achieving customer outcomes,
• Building greater “stickiness” with your customers,
• Introducing you into new market segments and/or sub-segments,
• Pulling through other services, and
• Enhancing your brand’s credibility with targeted buyers.
We will be providing additional blogs on the topic of acquisitions that delve into the detailed steps for each of these phases.
For additional McMann & Ransford insights specific to the MSP market, please visit Managed Services Providers | McMann & Ransford – Management Consulting.