Acquisitions can greatly expand your footprint into new regions, vertical markets, and technology segments. When you buy another MSP or solution provider, you’re also buying their marketing, customers, sales channels, and services portfolio. But, in doing so, you may create some conflicts of interest amongst your customer base, duplicate employee roles, and expand your services portfolio beyond what’s manageable.
When acquiring or merging with another MSP, it’s essential to understand every impact to avoid common pitfalls and ensure a smooth transition for everyone involved.
Understand Why You’re Acquiring — and the Impact
If you want to grow your business through acquisition, be clear on your goals. That may be as simple as reducing the competition by buying it or diversifying your customer base. You may be on the hunt to acquire another MSP to expand from a regional presence to a national one, for example.
No matter the goal, any merger needs to be the right fit — that requires understanding your target’s existing geographic reach, customer base, services, and solutions. Even if those all fall into line, you will still need to do a financial audit to ensure you don’t acquire an MSP with onerous liabilities.
Acquiring another MSP should not disrupt your business operations to the point that your existing customers notice. If anything, the acquisition should create opportunities to expand your service offerings to them. Combining two companies may mean phasing out some vendor partnerships to avoid duplicate service offerings. You’ll need to develop transition plans for multiple products and services that impact customers and vendor partners.
Unfortunately, that also applies to employees. Staff redundancies must be handled carefully because, once the dust settles, the organization needs to be ready to move forward together. Evaluate the strength of a potential acquisition’s workforce to see how it will respond to the changes resulting from the merger.
Culture Matters as Much as Technology
Workplace culture varies by MSP; it’s influenced by its size, ownership, or industry sector. Communication with employees during an acquisition is key.
You must engage with everyone involved in the process. The company you’re acquiring may do some things differently, providing an opportunity to revisit your values and vision. Remember that people in the company you’re acquiring are accustomed to their cultural environment. Your best bet is to put forth a collaborative vision for the new entity.
As you consolidate teams and services, you still need to hold on to your best talent and keep them productive. The point of merging with another MSP is ultimately to grow revenue, and unnecessary fear and insecurity among staff is a barrier to that goal. You want everyone to embrace the change while supporting them in their roles.
Build an Integration Team
Suppose you’re integrating a sizable company into yours. In that case, you may want to dedicate personnel to the process — and if acquisitions are part of your growth strategy, you may want to make it permanent.
Integration-team leads should only be working with handpicked people who can help rationalize IT systems and vendor offerings, optimize business processes, and help employees from both organizations settle into the new entity. You can promote a leader from within or consider bringing in an outsider. Either way, you want someone with solid project management experience and a track record of navigating mergers and acquisitions.
The rest of the team can be pulled from various business units, including human resources, sales and marketing, technical services, and finance. Every group should have its own action plan that dovetails into the overall integration strategy with an eye to meet agreed-upon deadlines and milestones.
Mergers have many moving parts, and technology integration can be daunting. While you may have the technical know-how in-house, you want your own people focused on meeting customer needs. Your integration team should consider outsourcing some work to external service providers. They can break down and execute the technical integration necessary in chunks, starting with core business applications.
Acquisitions and mergers can propel an MSP into markets and opportunities. Still, to maximize the benefits of bringing two organizations together, you need a clear plan that prioritizes communications and collaboration.