MSPs Must Anticipate the Impact of Mergers and Acquisitions

When big tech vendors merge, companies reselling their products and services can find themselves re-evaluating portfolios, business models, organizational structures, and the tools and equipment they use to serve customers.

Preparing for major mergers and acquisitions is just as crucial for managed service providers (MSPs), value-added resellers (VARs), and integrators as it is to keep up with technology trends and anticipate customer needs. Some mergers are complementary, but others can result in a combined entity that duplicates product lines.

These mergers can take a while, too, which means dealing with even more uncertainty. MSPs must be nimble and creative to manage the impact on their business and their customers and be ready to seize on new opportunities.

MSPs Need to Cushion Impact for Customers

A significant vendor merger can affect an MSP in two critical areas: the software and hardware it uses to support service delivery to its customers, and the portfolio of products and services it sells.

For an MSP, a merger can mean hardware product line consolidation and the sun setting on associated software tools. Vendors may jettison some of their own products in favor of those they’ve gained through the acquisition.

MSPs need to proactively seek clarity from their vendors as to product roadmaps and be prepared for it to change suddenly—the runway could suddenly become a lot shorter. Whether it’s billing software, network-monitoring tools, switches, or servers, MSPs should always have alternatives and be ready to migrate. And while a merger can be disruptive for an MSP internally, ideally customers won’t feel any impact from that disruption. Keeping the lines of communication open with vendors is critical, and MSPs must also do the same with their own customers.

An MSP’s customers will catch wind of a major merger or acquisition and have questions regarding how it will impact them. Getting clarity from vendors can help an MSP prepare its own customers for any potential changes. When that clarity isn’t there, MSPs need to have their own plan. Even if the answer isn’t immediate, it’s important for an MSP to have explored proactively the most likely scenarios and how they will support their customers.

One scenario that can’t be ignored is that a customer’s preferred software, hardware, or service may become unavailable; either because it’s been eliminated completely or the vendor is changing its channel strategy.

Mergers and Acquisitions Can Upset Business Models, Margins

A change in channel strategy is especially impactful for an MSP.

Mergers mean new management teams and staff shuffling and, in turn, a change in day-to-day relationships. More significantly, it can lead to shifts in strategies that can affect an MSP’s business model.

New management may shift its focus and approach to selling. That could mean abandoning industry verticals or customers of a certain size, or even abandoning the channel completely to sell directly. Such changes can lead to holes in an MSP’s service offerings and the loss of profitable business, which in turn requires restructuring on how to go to market.

Even without mergers and acquisitions, it’s hard to know what a vendor’s long-term strategy is. MSPs should always have backup plans in place to accommodate changes in partner programs. They must keep a shortlist of prospective alternatives for each of the key tools they use in case of any disruption in services and products from vendors, and consider running beta test projects in place with another vendor or even engage with dual suppliers. If one becomes unavailable, customers can be shifted to the other.

Mergers and acquisitions aren’t automatically bad news for MSPs and their customers, however. Vendors are just as likely to improve and enhance their channel programs, and they’re certainly not looking to sour partner relationships built over time. MSPs need to be just as nimble to respond to new opportunities that result from mergers and acquisitions, not just disruptive changes.