Successful M&A Boils Down to Culture, Transparency, Guts

BUILD IT LIVE ’22 — Day two of IT By Design’s Build IT LIVE conference began with a rousing panel centered around mergers and acquisitions. The session, moderated by industry and M&A veteran Arlin Sorensen, VP ecosystem evangelism at ConnectWise, featured Kevin Blake, CEO and president at ICS, Kevin Cook, CEO at The Purple Guys, Rashaad Bajwa, CEO of Integris and Neil Medwed, executive director of M&A, Meriplex.

The discussion ranged from biggest challenges, to how to triumph, whether you’re in a position to buy or sell. 

Mergers and Acquisitions: The Market Today

Sorensen started off by asking how the panelists view the current market.

Kevin Cook: “The people side of things is the biggest challenge. For us it’s all about finding the right cultural fit. What does that integration look like? Culture is the most important thing — you have to spend the time on it. It’s about finding the right owner that has built the right culture that we want to integrate into our business. Also, it’s important to remember — you think you know it all, but you don’t.”

Rashaad Bajwa: “People are getting nervous, on both the buy and sell side. Everyone has a different temperature on where the market is right now. That being said, there is still too much money in private equity — that has made things quite competitive. On the larger side, there are too few assets, so prices are still quite strong. Private equity (PE) firms in particular are interested in the managed services space; they want their recurring revenue. They are sitting on billions of dollars that they need to put to work. MSPs are attractive in that sense. Providers are softening a bit, based on nerves, but for good quality, premium companies, the prices are still very strong.”

Neil Medwed: “It’s an exciting time in the industry for all of us. I’ve bought 10 companies in less than two years. PE money is there. The spreadsheet does change when you have to go to the debt marketplace, and recession and inflation fears of course factor in. We’re all looking for high-quality assets, and solutions that make sense. The PE market just validated Meriplex’s path for the future.”

Kevin Blake: “We are really intentional about conveying what our company core values are. PE folks live in spreadsheets, but these are very emotional deals for partners. Every deal is a little different, so you have to take the time to invest, talk and learn. Do your due diligence. It can be a struggle.”

So, how do you actually integrate? asked Sorensen.

Integration, My Dear Watson

KC: “The deal is the easy part. It goes so quickly. The hard work starts after that. Transparency is huge. It’s a people-driven business; we need really talented people, and it’s a fight to keep them. There are some parts of the business where there is an opportunity for synergies. Be transparent with the group, whether it’s the owner or the COO, or whoever understands the team really well. You need to have those conversations early and up front rather than later. We need quality people to run the business on the ground. It is all about the people.”

RB: “Figure out what people’s exit strategy is. Some people want to go sit on a beach, some want to stick around. Find the best opportunity for them. You also need to make sure that there is alignment between leadership. Have a premium-people-first approach. Legacy means working well with the people who build the business.”

NM: “Every owner has certain superpowers. Some things they like doing, some things they don’t. Our job is to figure out what that superpower is, in terms of the leadership of the company you’re looking to buy or sell to.”

Slow and Steady Wins the Race

KC: “Choose carefully, and take your time. This process takes guts. Whether you’re a seller or buyer, take your time and make certain that you’re aligned with the business you’re trying to do this with. It is vital. Make sure you pick the right partner that aligns with your goals. This cannot be understated.”

RB: “Relationships and reputation are everything. You may only have one business to sell. You want to get it right. The relationships that you create are going to be phenomenal in terms of giving you wisdom. If this is a road you want to go down, start reaching out and having conversations. It’s a fast learning experience. The relationships that you create will be vital.”

KB: “Planning. Surround yourself with advisers. Grow your networks; figure out who to trust. It’s not just money, it’s not …