The technology industry continually evolves, and managed service providers (MSPs) are often at the forefront of this transformation. We brought MSPs, investors and other professionals in the mergers and acquisitions (M&A) space together for an exciting pre-day event at Kaseya Connect Global 2024. This dedicated symposium aimed to unpack current trends, challenges and strategies in M&A was tailor-made for MSPs, offering valuable insights into the complexities of acquisitions, mergers and sales in today’s MSP landscape.
Key Themes and Discussions
The M&A Symposium kicked off with an address by Kaseya Chief Executive Officer Fred Voccola outlining the climate in the M&A space as well as his insights into the current market and the challenges that he believes lie ahead. Other experts also offered their insight throughout the day’s sessions.
Understanding Market Dynamics
The symposium opened with a comprehensive analysis of the current market dynamics and a look at how those dynamics may impact MSPs looking to sell their business this year. Many aggregators are looking at a tough financial landscape and growing more cautious in their attitudes toward M&A. Also, a slowdown in the macro-economic climate is translating into delays in aggregators launching new projects. Buyers and sellers were urged to remember that M&A is a numbers game, and they must ensure that they’re calculating their value accurately.
Make due diligence a priority
A central theme of the day was the critical role of strategic fit and due diligence in a successful merger or acquisition. Honest financial assessments are critical, and everyone involved in a deal must do their homework to ensure that the financial picture they have is accurate. Buyers and sellers also must ensure that potential deals align strategically with their long-term goals. Real-life examples illustrated some of the common pitfalls to avoid and smart moves buyers and sellers can make to close a deal that benefits both parties.
“There have been a couple of companies that we looked at where there was blatant fraud, with fake bank accounts and manufactured statements,” cautioned Voccola.
Navigating financial challenges in a tight market
Another focal point was the current financial landscape, which can significantly impact M&A activities. Attendees learned that aggregators or large MSPs have typically been doing an average of five deals per year. However, half of those buyers told Kaseya that they will be slowing down or pausing M&A in the next six to 12 months. This is a good illustration of the precariousness of the market. The M&A slowdown can be attributed to high interest rates, too much competition and challenges in finding the right deals.
Post-merger integration and culture
Post-merger integration was highlighted as a make-or-break factor in the success of M&A deals. Having navigated a successful but extremely complex and challenging transition with Datto, Kaseya’s shared their experiences in taming the rumor mill, managing team integrations and aligning corporate cultures. Hearing these real-life examples and cautionary tales provided attendees with tools to manage change effectively, including how staff from different entities can work together harmoniously and drive the combined entity toward shared goals.
Future outlook and opportunities
The symposium concluded with a forward-looking discussion on the future of M&A in the MSP sector. As technology continues to evolve, MSPs face new challenges and opportunities. The panelists encouraged attendees to think beyond traditional models and consider how innovations like cloud computing, machine learning and IoT could influence future M&A strategies.
The M&A symposium at Kaseya Connect Global 2024 was not just an opportunity to learn about current trends but also a forum for forging new connections and envisioning the future of the MSP industry. As MSPs continue to navigate the intricate landscape of mergers and acquisitions, the knowledge gained from this event is sure to play a role in shaping strategies for growth and innovation.
