[London, 31 October 2019] MSPs are being squeezed by more demanding customers, having to provide a wider range of services and advice. The good news for the service provider industry in the Manchester area seems to be that competition for customers is not as frantic as in the south of England. But skills issues and a need to keep up the pace of change will impact particularly smaller MSPs, the Managed Services Summit North heard this week.
As an acquisitive MSP and now one of the largest global managed service providers, IT Lab Group’s CEO Peter Sweetbaum told some 100 MSPs that changes from Microsoft and others were causing MSPs to think hard about resourcing just to keep up. If his organisation, with 750 staff recognises the challenge of the changes this brings, how much more challenging must it be for the small supplier to keep up?
In talking about value in the MSP, he outlined what is attractive as an acquisition target in the current take-over fever atmosphere – below £0.5m EBITDA he said is probably too small to warrant interest, £1m-£3m is very attractive, but there are few of these because of the rate of acquisitions. At about £5m EBITDA, a seller can start to get private equity interested, but £10m is the real trigger for this. He also advised on what could put a buyer off – having a dependency of more than 20% on one customer would be regarded as a risk and a negative. For comparison, IT Lab’s biggest customer is about 3% of profits, he said.
His position on clarity and how a good target MSP is defined was echoed in the Summits second keynote by M&A expert Jonathan Simnett, Director of Hampleton Partners. He highlighted the value that having its own intellectual property brought to an MSP, particularly given the high multiples being scored by deals involving enterprise software.
Managed Services Summit North delegates were also provided with insights into the latest market trends and opportunities for MSPs by a number of the industry’s leading and most innovative vendors including: Bicom Systems, IT Glue, Auvik Networks, Carbonite, GoTo By LogMeIn, Kaseya, Sophos, Tech Data, and WatchGuard. They also had the opportunity to network and discuss such issues with other leading technology and platform providers such as Barracuda MSP, Bridgeworks, ConnectWise, Cyxtera, Huntsman Security, Imperva, Micro Focus, TitanHQ and Webroot.
John Garratt, Editor of IT Europa said that MSP marketing was going to be a key issue in how they defined their business pipeline in the coming period, and they should learn to leverage the resources being made available to them by vendors. For details of future Managed Service & Hosting Summit series events visit: www.mshsummit.com and www.mshsummit.com/amsterdam
About IT Europa
IT Europa is the leading provider of strategic business intelligence, news and analysis on the European IT marketplace and the primary channels that serve it. In addition to its news services the company markets a range of database reports and organises European conferences and events for the IT and Telecoms sectors. For further details visit: www.iteuropa.com
About Angel Business Communications
Angel Business Communications is an industry leading B2B publisher and conference and exhibition organiser. ABC has developed skills in various market sectors - including Semiconductor Manufacturing, IT - Storage Networking, Data Centres and Solar manufacturing. ABC has the infrastructure to develop a leadership role in the markets it serves by providing a multi-faceted approach to the business of providing business with the information it needs. For further information visit: www.angelbc.com
For further information contact:
Tel: +44 (0) 1895 454 604
Tel: +44 (0)2476 718 970