The Financials of a Merger
Kathy Wagner, CFO, Kaseya, and CJ Wimley, president and CCO, have both been involved in a number of acquisitions. In a keynote, Wimley asked Wagner for her take on M&A from a financial standpoint.
“Whether it’s a big or small company that you’re acquiring (from a Datto to a ‘two guys in a garage with a great idea’), you must have your financials in place,” said Wagner. “There are a few ways to look at this. Work on projections. What are the key metrics you’re using to value your business? Look at your efficiency, and always keep your profitability top of mind. You must care about the bottom line, which is sometimes difficult, but is absolutely vital. Also pay attention to profitable growth.”
Wagner said an MSP that is starting to think about selling or being acquired should get a head start on these things and begin tracking them now.
“Time kills deals,” warned Wagner. “The faster you can go, the quicker you can get money in the bank and you’re off.”
A partner must also have a rock-solid operational plan that can demonstrate growth. That’s what your valuation is. Wagner also advised partners to “disentangle.”
“As business owners, if you don’t want to sell your company, you have flexibility. When you’re starting to think about selling your company, disentangle your personal life from your business. Separate your cellphone plan, bills, company car, whatever it is,” she said.
