AMA: First add-on acquisition completed for my MSP (IT Services) Platform

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by an investor from University of Nebraska - Lincoln
in Austin, TX, USA

1yr ago

AMA: First add-on acquisition completed for my MSP (IT Services) Platform

I want to open up an AMA (Ask me anything) about my company's recent add-on acquisition of a managed service provider in Portland Oregon. I acquired my platform business in JuneredactedI think this AMA might be valuable for others just acquiring their first, and potentially looking for add-on acquisitions as a strategy. I love breaking through the boundaries of what most people think is possible. The world is full of made up rule & guidelines, once you break through a few you start to realize how you can really chart your own path.

Every deal is different, but there's the unique things about this one:

-proprietary deal

-no broker involved, only the seller's lawyer

-sourced through posting on Reddit

-an absolutely transformative deal...has increased my business's recurring revenue from 65% to more than 80%

-believe there was true alignment of core values, we shared everything with them prior to close (what we are and what we are NOT)

-sellers considered doing 100% seller finance (due to tax benefits) but ultimately preferred 100% cash, resulted in 20% discount to initial purchase price.

-2 sellers (1 wanted to leave the business entirely, 1 wanted to stay and grow), they were struggling with growth due to being excellent engineers and poor marketers

-structured phantom equity for seller who wanted to stay & grow so I wouldn't have to restructure my entity

-no outside investors, used cash generated from last year to acquire with 100% cash

-closed deal in 6 weeks from signed LOI, 9 weeks from initial meeting

-Legal was bill extremely low (my lawyer Eli Albrecht said: "I think this was a record for lowest billables on a deal").

5 Likes

255 Views

reply by a searcher 1yr ago
from George Washington University in Milton, FL 32571, USA

Appreciate the reply. Great example of operating leverage and using the strengths of the platform company. I was curious about EBITDA because I spoke to a M&A advisor who focuses only on MSPs a month or so ago. He said 6-7x EDBITDA for MSPs (even for targets with less than $2M in revenue) and over 10X for larger. I was surprised by what I considered a high multiple.

Love how it was sourced on Reddit.

reply by a searcher 1yr ago
from Georgia Institute of Technology in Atlanta, GA, USA

Ben,

Thanks for sharing. I’m a self-funder searcher and have recently tried to focus more on sourcing deals outside of the broker market. Would like to see if you have 30 mins over the next couple of weeks for a chat. If not maybe we can chat via email or redacted