Finding the Perfect Match for a Managed Service Provider
The Challenge
Two partners of a successful Managed Service Provider (MSP) were ready to retire after years of building the business. One partner planned to stay on board for two years post-sale to ensure a smooth transition, which added value to potential buyers. The business was well-established and generated significant interest, with no shortage of inquiries from prospective buyers.
The initial buyer we engaged with had ambitious plans to build a new MSP division within their existing operation, adding vertical growth to their business. On paper, this seemed like a great opportunity. However, as due diligence progressed and Purchase Agreement (PA) negotiations unfolded, it became clear that the cultural and philosophical differences between the buyer and the owners posed significant challenges. This misalignment was particularly concerning for the partner who would remain with the company during the transition period.
Our Approach
Recognizing the importance of cultural compatibility, especially during a prolonged transition, we advised the sellers to make the difficult decision to walk away from the initial deal. Despite the buyer’s financial qualifications and strategic intentions, the long-term success of the business—and the owner’s satisfaction during the transition—could not be compromised.
We then restarted the search, refining our strategy to prioritize not only financial capability and strategic fit but also alignment in company culture and philosophy. This involved targeting buyers who were not only looking to expand their market share but also shared the sellers’ values and approach to client relationships, team management, and operational integrity.
After an extensive search and careful vetting process, we identified a buyer in the MSP space who was already operating successfully and sought to expand their market presence. This buyer’s existing operations, culture, and management style aligned perfectly with the sellers’ vision for the business.
The Outcome
The sale to the strategic buyer closed smoothly, ensuring a seamless transition for employees, clients, and the retiring partners. The buyer quickly integrated the MSP’s operations into their own, leveraging synergies to expand services and market reach. For the partner staying on during the transition, the alignment in philosophy and culture made the process not only manageable but highly collaborative and fulfilling.
This deal exemplifies the value of prioritizing compatibility beyond the financials. By walking away from an ill-fitting deal and re-entering the market, the sellers secured a buyer who was a perfect match for the business’s legacy and future growth.
Lessons Learned
This case highlights several critical lessons for business owners considering a sale:
Cultural Compatibility Matters: Financial qualifications alone don’t guarantee a successful deal. Alignment in philosophy and culture is essential, particularly when a seller plans to remain involved post-sale.
Be Willing to Walk Away: Even when under contract, stepping back from a deal that doesn’t feel right can open the door to better opportunities.
Strategic Buyers Can Offer Unique Advantages: Buyers already operating in the same industry can bring synergies that accelerate growth, enhance client offerings, and provide a smoother integration process.