technologyreseller.co.uk 25 PCs Selling Your business? What happens next by Tom Jones, Focus Group ‘‘Demystifying the exit process – what to expect when you come to sell your IT MSP”, taking a look at the key factors Following on from my previous article, one of the most common questions I get from IT MSP owners is how the actual process works when it comes to selling. So here’s my guide to delivering a successful exit — with the M&A jargon removed as much as possible. 1. Do you need a corporate finance advisor? The biggest question at the outset is whether to appoint a corporate finance advisor. In my role leading M&A at Focus Group I’d be lying if I said it’s always easier working with an advised process, but ultimately it’s a personal decision. Fees for a reasonably sized MSP transaction can exceed £500k, so it’s not always obvious what you’re getting for the money, but a good advisor knows your buyer universe better than you do, has run this process more times than you have, and can act as a credible conduit for the difficult pricing conversations so you don’t have to. You could probably run your own IT infrastructure, but your customers pay you because you’re the expert. The same logic applies here. 2. Approaching the buyers – This is probably the most delicate stage of the whole process. Whether you’re running a formal process with an advisor or going direct, how you approach potential buyers sets the tone for everything that follows. Go too wide and you risk the market knowing you’re for sale before you’re ready; go too narrow and you limit competitive tension and leave money on the table. The goal is a targeted, controlled approach to a shortlist of credible buyers who have the strategic rationale, the financial firepower, and a track record of completing deals. First impressions matter; a well-prepared information memorandum (effectively a corporate dossier about your business) and a clear equity story will tell a sophisticated buyer a lot about how well run the business actually is. 3. Agreeing an exclusivity period – Once you’ve had initial conversations and a preferred bidder has emerged, you’ll typically move into an exclusivity period (saay 3-4 months), when you’re agreeing you will only negotiate with that one buyer. This feels like a big commitment and in some ways it is, but it’s a normal and necessary part of the process. The key is making sure exclusivity is earned; don’t grant it until you have a written down valuation and structure that you’re comfortable with. Once you’re in exclusivity, your negotiating leverage reduces, so make sure the material points are agreed before you get there. 4. The due diligence stage – Due diligence is where 99% of deals make it or not, and businesses that sail through invariably are the ones that are well prepared. Expect the buyer to go deep on your financials, customer contracts, employee arrangements, IT systems, and supplier agreements. Financial due diligence will focus heavily on your recurring revenue quality, gross margin by product, and churn history (which is why knowing your gross profit story is so important, as mentioned in the previous article!). The best thing you can do is have a clean, wellorganised data room ready before the process starts. Surprises in diligence cost you time, erode trust, and in the worst cases require a renegotiated structure or even kill deals. 5. The share purchase agreement – The SPA is the legal document that governs the transaction and it will be more detailed and more negotiated than you expect. Key battlegrounds typically include the level of working capital locked into the business at completion, the scope of warranties you’re giving the buyer about the state of the business, and any deferred consideration or earn-out mechanics if part of your consideration is performance-linked. Get specialist M&A corporate lawyer and make sure they’ve done channel transactions before, you want advice on what’s a normal buyer request and what’s unfair / needs pushing back. The SPA is where deals that felt agreed in principle can become unexpectedly difficult, and having experienced lawyers on both sides usually keeps things moving. 6. Completion and communications strategy – Completion day itself is usually anticlimactic; lot of emails, Docusigns, and promises of bank transfers before 5PM before the inevitable completion call and late night pizza - gone are the days of a wet signature and handshake in a lawyers office, but the feeling will be more focussed on relief than anything else. However, once the money lands, what comes next is crucially the most important part... How you communicate the transaction to your team, your customers, and your suppliers will shape the integration period and directly impact whether any earn-out targets are achievable. Don’t leave this as an afterthought. Agree the communications plan with your buyer before you complete, be transparent with your key people as early as you reasonably can and remember that your customers chose you because they trusted you; that trust is transferable if you handle it well. Come up with a plan with the buyer and work with them to make sure the process is as smooth as possible for all stakeholders. There you have it - hopefully an interesting insight into how us M&A teams work so when you’re talking to Focus Group in three years about selling your MSP, you can refer back to this article and how I said a process would run...! There’s obviously lots of moving parts that can change on a deal by deal basis (you could sell less than 100% of the business and partner with a buyer / institutional investor for example). Ultimately, everyone in the M&A world wants deals to transact as smoothly as possible, so hopefully this briefing helps you get there quicker! Tom Jones To learn more visit: https://focusgroup.co.uk This layer is being adopted by agent developers such as Hermes Agent and OpenClaw in new Windows apps designed to enable users to access on-device agents that can execute tasks in Windows applications, reason through cross-app workflows, generate images and video, code plug-ins and apps, and semantically search local files. In time, NVIDIA and Microsoft aim to extend their collaboration to include RTX Spark-powered Windows agent experiences accessible from the Windows taskbar user interface. “Our goal is to deliver unmetered intelligence to every home and every desk with Windows,” said Satya Nadella, Chairman and CEO of Microsoft. “RTX Spark marks a real breakthrough towards that vision.” Major hardware vendors like ASUS, Dell, HP, Lenovo, Microsoft Surface, MSI, Acer and GIGABYTE are supporting RTX Spark with the development of slim, lightweight, 14-16in RTX Spark laptops (with all-day battery life) as well as compact RTX Spark desktops due to be launched this autumn.
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