M&A: Only Three Words Matter After The Deal Is Announced
So, you’re a managed services provider (MSP) that’s set to buy or sell a business. Once the details are hammered out and the deal is official, only three words matter: Focus, integration and execution. Plus, it’s critically important for the seller to think of a merger or acquisition as a starting line rather than a finish line. Here’s why.
It’s been one week since Penton Media acquired our company, Nine Lives Media. We’re not an MSP, but we are a small business that encounters many of the day-to-day challenges (and opportunities) that you experience. Amy Katz (co-founder of Nine Lives) and I spent last week at Penton Media’s offices in Fort Collins, Colo. We were impressed.
On the one hand, we’re striving to leverage a range of Penton resources and expertise that we lack. I don’t want to share too much of the integration strategy, but Penton has database and SEO capabilities that should treat MSPmentor and its sister sites really well. In short, Penton’s team is insanely talented, and we’re thrilled to be part of the Penton family.
On the other hand, we’re striving to maintain Nine Lives’ unique culture… which is on display in this FastChat Video:
Three Words to Keep In Mind
For MSPs that are exploring M&A deals, I would offer the following advice: You’re going to spend dozens — perhaps hundreds — of hours working through the negotiating process. In our case, Amy Katz and our financial advisors worked incredibly closely with the Penton team to hammer out a deal. But selling MSPmentor and its sister sites wasn’t an exit or a finish line for us. Instead, it was a starting line for Penton and Nine Lives to work on something pretty exciting together.
Three Words to Keep In Mind
Once you have an M&A deal in place, you need to maintain your laser-like focus on customers even while you work on short-term company integration strategies and long-term execution efforts. Or more specifically:
1. Focus: You must maintain — or potentially boost — your service and support levels as soon as the M&A deal is done. All eyes will be on your company the moment a merger or acquisition is announced. There’s no time to celebrate. Customers will be gravely disappointed if you slip up post-merger. And rivals will be looking to move in and steal your customers.
2. Integration: Before the deal is even announced, you must pinpoint the exact areas of integration that the buyer and seller will need to rapidly address. In our case, there are basic technology integrations (phone systems, email systems, databases, etc.) and strategic business integrations (the sharing of best practices across two companies united).
But DON’T chase every potential integration point. You’ll hear plenty of recommendations. But before you completely blend your company with another company make sure you keep your focus on your customers. A small example: Even as our team starts to use Penton email addresses, we plan to keep our Nine Lives Media email addresses and phone numbers indefinitely, so that established readers and sponsors can always reach us.
3. Execution: When some MSPs seek to sell their companies, that’s the ENTIRE plan (“I want to sell and retire” or “sell and launch something new”). But that’s not really a plan at all. Instead, you need to show the potential buyer your growth plan:
- How is it that you expect to raise EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and revenues over the next few years?
- And what commitments are you willing to make to ensure those goals are met over the long haul?
In other words, the M&A deal isn’t the end of your vision. It’s the start of a new, bolder vision. You need a clear growth plan in place before the M&A deal gets confirmed and announced. And then every decision you make post-M&A needs to map back to the plan. Otherwise, your M&A deal will fail before it ever had a chance to succeed.