Enterprise Fuel, Part 2: Integrating New Acquisitions Easily
BY IT GLUE | July 28, 2020
One of the easiest ways for a growth-minded MSP to meet its revenue targets – especially in an economic downturn – is through acquisitions. While it’s a rare and glorious day to find a motivated seller who doesn’t charge a premium over fair market value for the sale, the reality is that buyers almost always pay a premium. To then extract an ROI over their hurdle rate on top of that premium means that an acquiring MSP needs to be able to use the assets acquired to generate significant additional EBITDA. The two obvious ways to do this are to increase revenue from the acquired assets, and to make them more efficient at converting their existing revenue into EBITDA.
To make the latter happen, the acquiring MSP needs to be able to make the target MSP more efficient. There are some gains to be made through redundancies, but the best way to make your target more efficient is to understand their processes, and to optimize those processes as much as possible. The means by which you do that is your Enterprise Fuel.
The most obvious target for efficiency gains are with repeatable processes. Any talented MSP leader can likely find a way to improve most processes, but the biggest gains are going to be found with the processes that are repeated most often. These are service desk processes and commonly repeated projects (such as new client onboarding and new hire training).
It’s an established fact that IT techs end up spending a lot of time looking for information. There are a couple of things to look at here. One is how well your target company documents its client environments. Poor documentation leads to techs spending too much time looking for information. If documentation is hard to find or use, you’ll have a similar problem. If documentation is a pain to update – like doing network maps in Visio, or using systems that don’t integrate with your RMM or PSA – then documentation becomes less useful over time. This means that over time the amount of time waste your techs experience will grow.
Now turn your attention to project-based work. Repeatable projects are often routine enough that you can extract substantial efficiency gains from establishing templated checklists, and streamlined methods of building out and using client documentation. New client onboarding is a lot easier when you can document most of the new environment easily through your RMM and network documentation software. If your on-site tech can then access that documentation, and add to it, with a mobile documentation app, all the better.
And what about billing? If you’re thinking about acquiring an MSP and their billing is a mess, surely there’s money to be found there. Efficient network documentation can help build out a source of truth for per-user or per-device billing, making sure you’re getting paid for everything you’re doing.
More accurate billing, increased service desk efficiency and streamline project processes are all fairly quick wins where an acquiring MSP can find the incremental gains in their acquired company over and above the acquisition premium paid.
This is what Enterprise Fuel looks like. And it all starts with having the right tools in place, including a powerful, integrated documentation system that your team will use every day.
To learn more about how IT Glue helps fuel your growth, take a deeper look at our platform.
