As the merger and acquisition trend continues across the managed services market, I figured it's time to weigh in with a few of my own experiences. It has been roughly five months since Penton Media (a big company) acquired Nine Lives Media (a small media business and parent of MSPmentor). The Penton-Nine Lives combo has worked out really well. But I must also concede: I've made my share of mistakes since the M&A deal was announced. Here are five such mistakes, and the things I'd do differently next time around.
1. Listen More, Talk Less: During my meetings with the Penton IT/Developer team in Fort Collins, Colo., I've spent considerable time talking -- with pride -- about Nine Lives' brands (MSPmentor, The VAR Guy and Talkin' Cloud). I yapped, yapped, yapped about our communities. In retrospect, I wish I talked a whole lot less and listened a whole lot more.
Nine Lives essentially is a small business. Penton has more than 1,000 employees. Many of those folks -- our peers -- are experts in their fields (content, search engine optimization, sales, etc.). I've learned a lot already from those folks. But I could learn more -- and learn faster -- if I simply listened more often.
Lesson for MSPs: Small business owners tend to be fiercely independent. They believe deeply in their own ideas and strategies. But there's a reason why small businesses get acquired by bigger companies. The bigger companies know how to automate processes and gain economies of scale. At some point, the small MSP owner has to swallow his or her pride and admit there's a lot to learn from larger companies.
2. Network Far More Internally: Most of my day is spent networking across the IT industry -- mostly in the channel. One of my favorite parts of the day: Replying to reader comments across our sites. Meanwhile, Penton remains packed with editors who have far more experience than me building websites that attract millions of page views. I've started participating in twice-monthly editorial calls with the Penton team, learning more about the team's leadership styles, talents, goals, etc. I wish I had done that sooner.
Lesson for MSPs: We've seen quite a few MSPs get acquired by national IT service providers. If your company gets swallowed up then make internal networking a top priority. Plug into the internal tools -- staff portals, conference calls, social media groups -- to get known fast. And begin to learn from people who are smarter than you.
Indeed, there are people smarter than you.
3. Take New Paths to New Goals: We've leveraged a pretty basic business model to build community at Nine Lives. We network at live events, we connect with CXO leaders, and we pull the conversation back onto our websites. The outcome: We generate about 250,000 page views per month across our channel sites. Meanwhile, Penton has websites that generate millions of page views from influential audiences. Surely, Penton's path to big website traffic was different than our path to community development.
Lesson for MSPs: The steps you took to build an early-stage growth company will be drastically different than the steps you take when joining a more mature, sustainable business. Hold fast to your secret sauce but admit to yourself that you'll need to embrace those alternative recipes for success.
4. Embrace IT Systems That Can't Be Changed: When Nine Lives was an independent company, I lived non-stop on my personal cell phone. Office phone? Who needs that? And I typically booked all my travel through Expedia before sending my expenses in a simple spreadsheet over to my business partner, Amy Katz. Many of my expense reports at Nine Lives were filed late. Very late.
When I arrived at Penton Media I received a new VoIP phone, and access to the company's employee portal for filing expense reports, booking travel and so on. It was a shock to my system. I have certainly used corporate IT systems before -- during my time at Ziff Davis Media and CMP Media. But it had been a few years since I adhered to corporate policy and plugged into a big corporate network.
The first few weeks at Penton (September 2011), my new VoIP phone sat in a box on the floor. The phone had some technology glitches and I didn't rush to call the help desk for assistance. I ignored the expense reporting system as best I could. I clung fast to my old ways. That is, until I realized some battles are not worth fighting. By October 2011 I started to see the error of my ways. The faster I plugged into Penton's IT systems, the faster I could focus on my true love: Building and managing our web sites. I finally learned that the IT systems could save me time ... if I just learned their nuances.
Lesson for MSPs: The moment you sell your business to a larger company you've essentially bet your business on that company's core IT infrastructure (email, phone, finance, travel, etc.). Accept those realities super-fast. But never -- ever -- let go of more specialized IT systems that made your small business great. In our case, that means holding fast to our WordPress-based websites until somebody shows us a better solution.
5. Don't Forget to Laugh (Even At Yourself): My personality is pretty simple. I tend to be very intense when it comes to winning, success and competition. But I also laugh -- a lot. During the M&A process, I think I got pretty intense. I was uptight during the negotiations, which were in good hands with Amy Katz (my business partner), our advisors and the Penton team. But the process weighed on me. And certainly, the process was all-consuming for Amy.
Looking back, I would have spent more time calling Amy to talk about non-M&A items -- life, family, vacations. Now that it has been five months since the Penton-Nine Lives deal was finalized, I've learned to relax a bit more. I'm laughing a lot more. And I'm dialing Amy and the rest of the Nine Lives team to talk about life outside of the office. It's a good balance.
Even when I mess up I take a deep breadth and march forward. Yesterday was one such day, when I made some erroneous entries in our newly implemented marketing system. Mistakes happen... but I won't make them twice.
Lesson for MSPs: Other than getting married and having kids, the most stressful time in my life was during the M&A negotiations. And ironically, I wasn't even all that involved in the negotiations (here again, Amy had everything under control). Looking back, I would have found an outlet for my stress. The gym. Vacations. And of course: More laughs. That's an FYI.
What I SkippedYou'll notice that I didn't mention any of the following items... because frankly, we got them right.
1. Financial Structure: Our M&A process was very thorough. We had good advisors (Foundation Partners) and Penton was a firm but fair negotiator. We found common ground each time we hit an impasse. I strongly recommend that MSPs exploring M&A deals find a good external advisor to help you get your house in order. Assuming the advice you get is sound, you'll avoid numerous mistakes, delays, snafus and potential heartache.
2. Exit Strategy: During a potential M&A deal ask yourself the following question: Can you picture yourself working for the buyer? If not, is the buyer willing to let you exit pretty quickly? Answer that question to ensure you're pursuing an M&A engagement for the right reasons. As I stated during the initial Penton-Nine Lives announcement: This wasn't an exit strategy. It's an acceleration strategy.
3. Culture Conflicts: Sure, the Nine Lives team has had to embrace business processes and other big-company realities. On the flip side, the Penton team has had to deal with my move-fast mentality, sometimes racing forward on something when all the details haven't been worked out. But during our very first meeting with the Penton team, we knew we could be a cultural fit. Penton folks seemed to genuinely enjoy their jobs. And when one employee doesn't have an answer at their fingertips, they find us someone who does. Pretty impressive.
We've still got a lot of work to do as we seek to scale Nine Lives Media. But I'm still enjoying the journey. And now that the initial "M&A stress" is over, I'm back to enjoying what I love most: Blogging and engaging with our readers. And laughing each time the opportunity arises.