Ready To Sell Your MSP? Here Are Some Checklist Items!

For whatever reason, there may come a time when you’re considering whether to sell your managed services provider (MSP). It happens to many MSP owners at some point, so you wouldn’t be alone. But what you should know about the process of selling an MSP is that it’s usually challenging, especially if your paperwork is sloppy.

If you’re not ready to sell your MSP right away, that’s okay — most people aren’t. What’s important is you recognize when you need help and are willing to adapt to overcome your shortcomings, even though that may take some time.

Before selling your MSP, take a step back to assess your situation honestly and determine whether you’re actually ready to go through the process of selling your MSP. “How much is my MSP worth?” is only one of the questions you should ask yourself when you’re considering selling your MSP.

You must be open to constructive criticism.

Simply put, criticism is hard to take. Not many people are comfortable with being critiqued. You must be okay with an outsider constructively criticizing you and your business when you’re in the process of selling your MSP. This may seem a bit obvious to you, but there are many business owners who can’t or aren’t ready to handle the additional pressures that come with selling an MSP or answering difficult questions from peers. (If you’ve ever watched an episode of Shark Tank, you know exactly what being under the bright lights can do to an entrepreneur.) Knowing your business, especially your numbers, is one of the best ways to become more comfortable with receiving constructive feedback about your business (but more on that later).

How are your finances?

One of the scariest things for the potential buyer of an MSP is looking under the hood. You never really know what you’re going to find — and sometimes what you find can be a deal breaker. For example, if you think you’re going to be able to sell your MSP when you’re using the same checking account for personal and business finances, you’re in for a rude awakening. While everyone launches a business from a different starting point (some people are sloppier than others), getting your finances in order is absolutely necessary when selling your MSP. Everything about your business should be buttoned up (your finances in particular) when approaching a buyer.

Do you have a business plan?

Shooting from the hip can only get you so far in business. In fact, the majority of business owners don’t have a business plan in place (only 20 percent of business owners do). Maybe you’re able to run your MSP without a business plan today, but a business without a business plan is a big red flag for buyers. Your business plan should include information on your market and sector, services, revenue model, a competitive analysis, a marketing plan, and more. Buyers want to buy businesses, not a name or a personality. Your business should run without you.

Do you know your numbers?

As mentioned earlier, finances are of the utmost important when selling your MSP. You’re going to need cashflow statements, revenue segmentation, future financial forecasts, outstanding liabilities and litigations, tax filings, and more. Do you have all these documents readily available? If not, do you know where you can locate them? Do you know your numbers when a buyer asks you for them?

Other questions to consider when selling your MSP:

• Who are your biggest competitors and how do you win against them?
• Describe the culture at your company and any activities that promote team building, knowledge sharing etc.
• Are your financial statements audited?
• Are there any undocumented expectations by employees or others regarding shares, ownership, or payout in the event of transaction taking place?
• What is your total close percentage?
• What is your client concentration in terms of location and field?

Selling your MSP isn’t easy, but if you prepare ahead of meeting a buyer, the chances of you selling your MSP successfully increases significantly.