Identify a clear goal. For example, if your goal is to expand service offerings, our partners recommend looking for companies that offer services complementary to your own. Identifying a complementary service is easier than you might think; simply ask your current clients. If your current client base has demand for a service you don’t currently offer, looking for a company who successfully offers that service is a good way to begin your search.

Determining financial alignment and integrations is another important piece of the M&A puzzle. From the financial aspect, try to get the most accurate view possible of the company’s books you’re assessing. You can spend a lot of time in this phase, but it’s necessary to determine the maturity level of the company. Integrations also have a major impact on success post-merger or acquisition. For example, if you merge with an MSP who uses the same vendors, applications, PSA software, or BCDR solutions as your own MSP, this signals fewer headaches trying to integrate your two businesses. If, however, you use vastly different vendors and solutions, it may be in your best interest to walk away, as the integration work you’ll put in post-merger could be more than you bargained for.

Cultural alignment and communication will also serve as key ingredients to M&A success. Take all of the time you need to get to know the MSP you are considering joining forces with while you’re assessing finances. That time is crucial in deciding whether it’s a worthwhile deal. As service-based businesses, people are always the focal point, and internal alignment needs to be present for your clients to reap the benefits in the long run. Constant communication throughout both of your businesses is also vital. Both parties in an M&A should be in agreement about when to communicate the deal to employees. Get on the same page in terms of messaging and be prepared to field employees’ questions and concerns the moment the news is shared.