In this blog, we’ll explore how IT documentation can help ensure a smooth merger between two organizations.

Importance of documentation in M&A

If you are in the market to sell your MSP business, you need to understand what buyers are looking for in an MSP. The MSP industry is evolving at a rapid pace and it is no wonder that most buyers are on the lookout for mature, high-quality MSPs that are extremely efficient and process-driven. There are many factors that differentiate mature MSPs from less mature ones. One of them is documentation.

By documenting all your business processes and critical tasks, you are sending out a message that your MSP business is efficient to operate and no longer dependent on the business owner or one key individual. If you intend to exit the MSP business at some point, you must invest in a robust document management system.

Besides improving your value, IT documentation can also help with your M&A process. Depending on the size of your business, the M&A process could take anywhere from three months to a year. From performing due diligence to integrating business tools in the new organization, documentation is vital to the M&A process. Without documentation management, finding information about a company’s operations can be excruciating.

How IT documentation can help ensure a smooth M&A transaction

When two organizations merge into a single entity, both organizations are required to share their internal records and data. Even with proper documentation and information management, certain challenges may arise during the M&A process. Issues like poor training infrastructure, knowledge loss, complex IT environments, difficulty in identifying documents, etc., may become visible during a merger.

IT documentation can help you avoid these issues by providing the following benefits:

• Automation: An automated process helps in a smooth transition. A well-run MSP automates as much of its documentation as possible to reduce the administrative burden on techs. You get better productivity from techs when they can focus on tickets and project work. In that sense, automation helps boost your productivity as well. The degree to which processes are automated reflects the maturity of your MSP.
• Easy access to information: Every M&A process starts with due diligence where both companies evaluate the operations of each other to ensure long-term benefit. Vast amounts of documents, including financial information, operational details, HR information, safety measures, compliance information, etc., will be analyzed during the process. When all information is well-documented, you can simply provide read-only access to all due diligence information and ensure instant access to all vital information.
• Reduce knowledge loss by bringing structure: In most cases, acquisitions are followed by a significant increase in employee turnover. This could cause many new difficulties in a merger. For instance, when a key employee with vast institutional knowledge leaves an organization, it results in significant knowledge loss. If you already have a well-documented process, you don’t have to worry about any knowledge loss resulting from turnover. Without documentation, your dependency on people increases, and this will impact the chances of getting acquired.
• Training infrastructure: Onboarding is a painful process. This becomes even more complex if you don’t have a training infrastructure in place. When you have everything from SOPs to training materials properly documented, it helps in getting your new techs up to speed. Since we are in the midst of the Great Resignation, you have to be prepared for turnover whether you like it or not. Remember, the smoother it is for you to transition from one employee to another, the easier it will be to build your MSP’s growth.
• Post-merger integrations: Documentation benefits are not just limited to the M&A process. Even after the merger is complete, your documentation can come in handy when integrating the tools, techniques and systems in both entities. When you have multiple systems from both organizations, the process becomes inefficient and costly. With document management systems, you can identify redundant systems and bring them all under the umbrella of the organization’s core system.

Boost your value with robust documentation

With global IT spending expected to cross $4 trillion in 2022, the need for MSPs to merge and emerge into robust entities is higher than ever. That lack of proper documentation infrastructure can affect an MSP’s ability to get acquired or get the right value during acquisitions. Documentation can speed up your merger, save technician time and lower overhead acquisition cost. Hence, enforcing documentation management could significantly boost your MSP value in the market.

To know more about how IT Glue’s documentation solution can help in the M&A process, request a demo.

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The post How IT Documentation Can Help With a Smooth M&A Process appeared first on IT Glue.

The reality is that when you are a business owner, the objective has to be to increase the valuation of your business. And the reason is simple — one day you’ll want to exit. And when that day comes, the higher the valuation the better, for you and your family.

So where does profit come from?

In an MSP, profit comes from a few different places. People are definitely part of that, but process is even more important. This may sound cold, but it’s reality. A great MSP is full of talented people who are the cream of the industry and are compensated accordingly. But MSP owners have to embrace the fact that great people leave, and it’s ultimately process that minimizes the harm caused by such turnover.

So yes, you need to have great people, but you also need to have a plan in place so that your business — and your retirement fund — doesn’t depend on them.

The importance of processes

Most businesses go through a learning curve to determine the processes and systems that work best. You need processes that deliver great results operationally and financially, but that are replicable. Once you’ve spent months or years getting to the point where your company has a great rhythm and fires on all cylinders, you have great value. You must capture that value. Document it, and train it to all your new hires.

It is not enough to be great, you need to be able to store and transmit the information and processes that make you great. That way, you’re not just great today, but can sustain it for the future.

Capture value from institutional knowledge

This is where valuation comes in. When you’re looking to exit — maybe you have another venture you want to start, maybe it’s just time to retire — you want to be paid out for all the hard work you put into building a great company.

Everything that makes you great — all those processes and institutional knowledge — has to be captured somewhere. That way, you can show prospective buyers that they are paying not just for a company that is great today, but a company that will be great tomorrow when the new buyers take over. This is called selling high.

Don’t forget to be awesome in other ways

There are other things that great MSPs do that contribute to profit and valuation, too. They are rapid adopters of innovative new technologies. They invest in sales and marketing. But above all else, great MSPs recognize the value of process, and they recognize that to do amazing things consistently over time is the key to sustained success, long-run growth, and ultimately to valuation.

At IT Glue we are committed to the principle that when our partners succeed, we succeed. So we want to do what we can to make your MSP the best possible. That means providing you with a constant flow of product upgrades and value-added services, a Knowledge Base over 150 articles strong, and an entire team committed to your success. Let’s take this journey together.

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