There is a lot of merger and acquisition activity in the IT outsourcing industry today, including plenty here in the in the DC area.
While this isn’t necessarily a new trend – private equity firms have been busy in the IT space for several years now – it does seem to be escalating and affecting more and more people within our extended Optimal community. And with the MSP market expected to grow from $223 billion to nearly $330 billion by 2025, this trend will likely continue.
That being the case, we thought we’d put together a few articles that will explore what these purchases usually look like from your perspective, and what steps you can take to make sure the transition will go as smoothly as possible. It can be extremely stressful to hear that the company responsible for your technology systems has been purchased, so our goal is to help demystify the process, ease fears, and ultimately minimize the disruption to your business.
We’ve seen acquisitions from both sides: Over our 30 years in business, we’ve made several acquisitions of our own, and have also had some of our key vendors acquired multiple times (some of which were handled quite well, some of which, from our perspective, were not).
With these experiences in mind, we’ve outlined what you, the client, can expect if you’ve learned your IT provider has been purchased.
If your MSP was bought by another company, expect…
1 – To be taken by surprise.
Due to various legal restrictions your provider will have their hands tied when it comes to giving you advance notice of the purchase. In fact, your provider’s own employees probably won’t know much until signatures have dried on the official acquisition paperwork. This can seem like an indication of poor planning or lack of caring on the part of your provider, but in most cases it’s an unavoidable matter of confidentiality.
2 – Turnover.
As the two IT companies come together, there will be functions that become overstaffed, duplicated, or otherwise no longer needed, which will result in some folks being let go. Some employees won’t want to work for new leadership, and some will use the inflection point as an opportunity to assess their options. All told, someone you had built a trusted relationship with might leave.
3 – Hiccups in service.
Where there is change—and where there is the turnover described above—there is some pain. No two IT providers will have the same back-end systems, processes, and philosophies; while the two companies likely were compatible enough for the acquisition to make sense, they won’t be carbon copies. As hard as they will try to integrate while also keeping their attention on service delivery, the transition will have bumps in the road.
4 – Your voice to matter.
This point is perhaps the most important of all. The company that purchased your provider wants to keep your business, and the owner that sold to them is financially incented to make that happen. (And, in many cases, your provider will genuinely want to see you do well.) This means that if you are highly uncomfortable with how the acquisition has been presented, if you’re concerned about losing key members of your account team, or if hiccups in service are affecting your ability to thrive as a business, don’t suffer in silence—deliver the feedback and give your provider a chance to course-correct. They’ll likely seize it.
As the person responsible for your IT partnership, you know how critical your MSP is to the smooth operation of your business; in this age of remote work in particular, few organizations can function without technology. This is what can make an MSP acquisition so nerve-wracking.
We hope that knowing what to expect will help make the change a little less daunting to navigate.