New Charter Focuses on the Entrepreneur Journey with Different M&A StrategyNew Charter Focuses on the Entrepreneur Journey with Different M&A Strategy
The portfolio company of private equity firm Oval Partners has a unique model in a continually fluctuating landscape.
May 13, 2022
M&A has undoubtedly become one of the most prevalent trends and topics in the channel over the last few years. With investment dollars surging into the sector, MSP mergers and acquisitions, as well as private equity deals, are at an all time high. Thus, M&A is on the minds of partners everywhere — whether a central focus, a distant goal, or in the side mirror.
In an industry inundated with such activity, New Charter has a rather unique model. Its foundation is centered around the idea of the entrepreneur’s journey. Rather than consolidating businesses to reach new growth and service delivery levels, New Charter partners with companies and brings them under one umbrella to then funnel up into the overarching business. The companies under said umbrella are able to continue to run their own business, while being architects in the creation of a niche of businesses the industry has not yet seen.
So, collectively, the businesses are involved in the future success and growth of the company.
New Charter’s Mitch Morgan
“The idea is to make these businesses, genuinely, the best they can be,” New Charter CEO Mitch Morgan told Channel Futures. “This is ultimately really good for the industry because of the near-constant turns and shifts that occur. We will, of course, continue to spend more money on technology, but how we spend it will change. For example, we won’t be managing on premises file servers forever — that will most certainly change. We, as an industry, will continue to move into new spaces. And so we feel that with our capital and scale we can and will keep making those kinds of investments.”
Who Moved My Cheese?
The traditional economic revenue model is continually fluctuating. The cheese is moving, and partners need to ensure that they are moving with it.
So, what should partners who are looking for a possible off-ramp consider?
“An MSP that is considering taking the dive should make sure they have a clear understanding of what life is going to be like after the transaction,” says Morgan. “So many partners focus much of their attention on the multiples and valuation portion and don’t pause to consider the end result. We happen to have a situation where our companies roll equity, and so there’s a big upside for them in terms of the total first and second bite. But, in these situations, you have people you care about, you have clients who care about, you have a legacy, etc. So, pause to consider what the end game is, and what it will look like.”
Morgan went on to say that New Charter has 18 companies on board, and 17 of the founders are still with them.
“Our people stick because they enjoy what they’re doing and are passionate about running their own business,” adds Morgan. “And so I really encourage anyone that’s considering doing something like this to begin with the end in mind. What does this look like on the other side? That is the kind of thing that you want for your people, your employees, and for yourself. Again, begin with the end in mind.”
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