ConnectWise’s Arlin Sorensen

Beyond the flow of capital, private equity also brings one factor experts say is necessary for the channel: structure.

Arlin Sorensen is VP of brand and ecosystem evangelism at ConnectWise.

“Private equity and the growth it brings to our channel has a lot of value. They create the need for strong governance through the discipline of a board of directors and the reporting and communication required for ongoing operations,” Sorensen said. “With significant growth in these private-equity-owned companies, employees also have many more options for a career path and upward mobility. Those are not available in many smaller companies. These larger entities can also provide more benefits and other employee perks making a better working environment.”

However, structure isn’t unidirectional. Private equity firms also benefit from the financial infrastructure MSPs provide them. MSPs are learning the importance of contracts and recurring revenue as it applies to value. Several successful MSPs are signing customers up for contracts instead of the pay-as-you-go model. When revenue streams are predictable, private equity values MSPs much higher.