Why preparation and timing are two key factors when selling your business by Tom Jones, Focus Group “You might not be looking to sell your business today, but here’s why putting the ground work in now will help you secure an exit in three years” Throughout my career advising comms and IT businesses and leading M&A for one of the UK’s leading buy and build platforms in the channel, I’ve met many businesses that have said “we’d love to talk to you but now’s not the right time” - then reengaged a few years later, and left thinking that the sellers have left value on the table by not preparing properly for an exit. I’ve set out the key criteria for driving value in your IT business, so that hopefully when you come to exit, you’re prepared, and ready for the highs and lows of an exit process. Given the ever-changing dynamics in the IT MSP space (are we in a buyers market, cost of capital increase, AI threat/opportunity) it’s even more important now than ever to take a long term view on all decision making, particularly exit planning. Here’s my tried and tested methodology for building for an exit: Know your buyers – work out who you think will be the most likely acquirer for your business, and work out how they value you. Of course, the problem is ending up looking like you have a “for sale” sign over your business, but get to know who you think would acquire your business, talk to specialist advisory firms and some of the trusted buy and build platforms. The key here is if you understand your buyers now, you can help position the business properly by forming a strategy that suits them – eg are you an enterprise or SME specialist? Does that match your buyer’s strategy? All the buyers will want similar things (predictable, high recurring revenue and cash generative) but knowing the specific nuances of your buyers will help determine your strategy – spend time understanding where you fit in the competitive landscape, and adapt to maximise value. Optimise the business for sale – think through the business from top to bottom and come up with a plan for every part of your business to maximise value. How does driving revenue change on a three year horizon and how can you maximise for exit? Can we simplify our product offering to improve efficiency and customer satisfaction? What supplier renegotiation have we been putting off? Are those corporate hospitality season tickets actually driving value in the business? Look at how every pound spend works for you as a shareholder and work out what is worth the investment on a three year return and what isn’t. Make sure all shareholder costs are at arms length. If you want to exit the business, make sure you have a succession plan – think through how a buyer would perceive your role in the business and what that means to a potential structure – you may have some of the key customer relationships which would likely lead to an earn-out type structure with payments linked to customer handovers. If you genuinely want to leave the business, start working out how you leave now and how that impacts profitability. This stretches further than the founder too; consider if there’s something unique about your business that may cause concern for a buyer; eg are there certain members of the service desk that answer all of the key customer queries, how will they react if you sell the business, and how can you give the buyer comfort that they aren’t a flight risk? Allow for quick wins for the buyer - Really think through how the buyer will make money - dont lock into long term contracts with key suppliers with large annual commits for example. Think about how embedded your AV, RMM, Anti-Spam solutions are in your PSA? How wedded are you to them staying in situ post-completion and what products are your prospective buyers selling? You may not want to align with a specific buyer, but start thinking about what are the easy wins that allow your buyer to make more profit that will help them pay you more for the business Finally, dont take the ball of performance (and be ready to prove it) – the most important value driver is sustainable organic growth; if you can grow the business year on year, it allows a buyer to assume it will continue to grow the business, ultimately meaning they can pay you more for the business today. Focus on driving profitable, sustainable growth and make sure you can prove this out with your data. Us buyers want to understand your gross profit story in lots of detail (new logo wins, churn, upsell, product churn, price pressures) – make sure you know your gross margin story and what it means for your business too. In summary, the most important takeaway if you’re looking to sell in three years is start preparing now, and build the story in your head from a buyer’s perspective - the more you understand the buyer mindset and prepare, the easier it is for a buyer to get comfortable around a better valuation for your business. Ultimately, if a buyer sees lower risk, it can increase the valuation for the business. Tom Jones To learn more visit: https://focusgroup.co.uk Focus_TRV93.indd 1 05/06/2026 07:48 Powered by Partnership With Ethernet Flex,the latest addition to our EoFTTP portfolio, get symmetrical, fast full-fibre connectivity and the ability to burst up to 1Gb, at a competitive price point. 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