Trivalent Group, ranked No. 47 on this year's MSPmentor 100, expects to make another acquisition sometime in the next couple of weeks. Trivalent CEO Larry Andrus mentioned the pending deal during yesterday's MSPmentor 100 webcast (archive available February 22). But that's not all. Two other MSPs within the MSPmentor 100 expect to complete additional managed services acquisitions within the next two months, MSPmentor has learned. Still, it's important to keep all this M&A activity in mind.
Despite all the M&A hype, multiple sources say the MSP market continues to suffer from multiple M&A challenges:
- Too many would-be sellers;
- too many break-fix resellers posing as MSPs;
- too many MSPs seeking valuations that are beyond reason; and
- too few buyers.
Separately, two other MSPmentor 100 companies told me yesterday that they expect to complete new M&A deals within the next two months. In both cases, the pending deals involve Cisco-centric solutions providers that have been pushing deeper into managed services.
I'm curious to see how long the M&A trend continues in the managed services market. Some MSPs seem to be holding out for valuations (2X annual recurring revenues or more) that are too lofty for potential buyers. Also, we're starting to hear about recent M&A deals that didn't turn out so well. In one alleged case, the staff of an acquired company essentially quit because the buyer didn't properly manage communications about the deal (we're still digging for more info on that item...).
Either way, MSPmentor continues to caution readers: Everyone isn't selling. And everyone isn't getting rich. There are some great M&A deals occurring. But thousands of MSPs continue to build their businesses and grow on their own.
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