Plenty big and well-known MSPs have executed their exit strategies over the past few years from Tommy Wald, former CEO of White Glove Technologies (now at TW Tech Ventures, LLC) to Dave Sobel of Evolve Technologies (now director of partner community at Level Platforms) to Arlin Sorensen, CEO of Heartland Technology Solutions (continuing in several other top roles at a handful of organizations, including a startup). But maybe you don’t want to sell. Maybe you love what you are doing and are enjoying the process. So should you still keep your business in sales-ready shape? Inc. columnist Margaret Heffernen recommends that you do. Here’s why.
First, by making it “fit to sell,” she writes, you will make sure it’s healthy. You are creating an asset that other people can understand. You are building something that is ready, either for the next generation or something that will get top dollar when you do decide to eventually sell.
Heffernen offers the following tips to get started with the process:
Make yourself dispensable
Heffernen points out that if the company relies on your creativity, ingenuity, inspiration, salesmanship or charisma above everything else, no one will want to buy it. If it can run without you, it is more valuable to a buyer.
Ensure stable revenue
Most businesses are valued using annual revenue, Heffernen reminds us, and the buyout price is largely determined by the stability of that income. That puts MSPs with recurring revenue streams in a strong position. “Subscriptions, renewals, a roster of clients tied to your products or services represent recurring revenue that is more valuable than cash,” she writes.
Build a farm team
Buyers will prefer to seen internally groomed talent and organic growth, Heffernen writes.
Assets: What’s for sale?
Revenue, customer base, technology or people. Any valuable business offers at least one of these, Heffernen says. A few great companies can offer all of them. Where do you stand when it comes to these assets?