Could You Sell Your MSP in Five Years?
You can sell your MSP in 5 years if you start preparing today. I founded, grew and sold a business with 2MM in ARR in under 5 years. Now my second services business is generating over 7 figures in ARR, and that took me under a year.
Selling a 2MM services business was a really interesting experience, but how did it compare to selling an MSP at 20MM?
Whether you’re a brand new MSP, a 2MM MSP or a 20MM MSP, you can lay the foundation to sell your MSP in 5 years and prepare for a successful exit now.
On Tuesday, November 03 at 11:00 AM CT, I hosted Jim Turner, CEO of Hilltop Consultants for a webinar where we discussed our acquisition events. Jim recently sold his 20MM+ vertical-specific MSP to Intelliteach. Intelliteach has since rebranded to Frontline Managed Services.
Read about Jim Turner and his MSP sales success story here:
https://www.intelliteach.com/intelliteach-aquires-hilltop-consultants/
Then Join Us To Learn How To Sell Your MSP in Five Years or Less!
Join us for a fireside-chat style webinar where we talk with Jim Turner about what he learned, what he did to prepare, what he might have done differently, and what he’s going to do next. Learn about Carrie Simpson’s exit from Everywhere Managed. Steal the best practices of both business owners as you begin to plan right now to sell your MSP. The things you do today will affect your exit – whether it is one year, five years or more years from now.
You can register for the event here:
https://app.livestorm.co/sales-pros/retire-in-five-years
If You Missed The Live Event:
www.managedsalespros.com/events for all MSP Sales Webinar replays
In the meantime, I’m happy to share with you the experience of my first exit.
What Was Selling Your Business Like?
Short answer: selling my company was disappointing.
I woke up the next day as the exact same person I was before I exited. I had the exact same flaws and vulnerabilities. I felt all the same feelings, plus I woke up with some extra feelings that I didn’t really like or enjoy.
“Did I make the right choice?”
“Should I have held out for a better offer?”
“Shoud I have kept going for another year and waited to see what happened with Covid?”
“Will my team be okay?”
That got worse before it got better – and some of it was likely pandemic-related. There’s nowhere to go, there’s nothing to do, and there wasn’t a big Las Vegas club party like I had always dreamed of. Selling my business was the right choice for me, but the day after the deal closed, I experienced anxiety, doubt, anger, regret…and grief.
I grieved for the company I wanted to build more than I was able to celebrate selling it.
I did not particularly want to sell my business. I’m happy I did, but I had a five year plan, and I was only in the third year of it.
We were killing it, on target to add over 1MM in ARR this year. Managed Sales Pros is a great business, and Everywhere Managed (which no one who reads my blog here has ever heard of since it wasn’t IT channel specific), was a profitable, quickly growing US based call center. I wanted to exit from both of them in 2022.
Covid-19 did not affect our ability to find new clients, in fact – more people than ever before were now interested in telemarketing for their business growth. Unfortunately, Covid-19 absolutely affected our ability to hire new agents.
What was negotiating the deal like?
It was three days of fast and furious phone calls and emails, and then it was over. And then it was a ton of work afterwards to figure out what we needed to do to close the LLC.
It was a nice clean deal with no non-compete and no golden handcuffs. I exited to a company that I respected. It was a fair and uncomplicated offer.
While I sound disappointed and wistful for what might have been, it could have gone significantly worse, I am grateful for the timing. Had the pandemic hit in 2018, our business would have failed.
The work that we did in 2018/19 prepared us to weather a pandemic, and set us up for a successful exit.
I just exited a lot sooner than I had planned to.
So when I say “start planning now to sell your MSP” I’m not just saying it because I want you to buy cold calling – we ran an okay business from 2014 t0 2017. We ran an exceptionally profitable, high performing business from 2018 onwards. Two high performing years does not an incredible exit make. I needed five. If you want to sell your MSP, start getting your house in order.
The Beginning
As a Canadian citizen running an American company, I had some pretty unique challenges. There were absolutely no US credit options available to me, and no merchant accounts available to me. My first business credit card wouldn’t have paid for a client dinner. I navigated regular and unpredictable immigration policy changes. When I started Everywhere Managed LLC in 2015 (2 years after I founded Managed Sales Pros), I had a young child, a university aged child, no savings, and no safety net. My partner beleived in me enough that he quit his job to parent so I could focus on growing the business.
When I started my first business I had no savings, no college degree and no business acumen. Now, seven years later, I could absolutely retire if I wanted to live modestly for the rest of my life. I started late in life – I founded my business at the age of 41, and I had no plans for “exiting”, I just didn’t want to work for anyone else. I was in sales, I went to rehab, I was a fitness instructor, I went back to school, I became a foster parent, I had another child late in life – there was no business plan. I just figured people hated cold calling, and I didn’t. So why not do it for them and work from home while my new baby was sleeping?
The First Big Milestone
Turns out people hate doing their own cold calling so much that we were a million dollar company by year three. I didn’t recognize that as being interesting or unique – I had no barometer by which to measure my success, and I was still running from fire to fire, so I wasn’t engaged with peers, or taking courses, or reading business books. I didn’t understand profitability, I guessed at pricing, and didn’t understand what COGs were. I was just happy that we always made payroll and I was even happier that I had some extra leftover most of the time. I didn’t know how to budget for a business of that size, and since there was always money, I didn’t worry about learning.
The First Big Setback
Then we had a year where that wasn’t as simple as the previous year – it felt like no matter what we did, nothing was changing – we were working twice as hard, we had more employees, and I had less money.
Turns out that learning how to budget around your desired profitability was pretty important. I was great at budgeting when I made 15/hour. You either budget or you don’t pay your bills. When I went from a minimum wage employee to the owner of a million dollar company, I felt entitled to…do pretty much whatever I wanted. I had money for the first time in my life. I also had a scarcity mentality: “what if this ends, and I never get to…” I attributed my success to luck, not the hard work we all did. I spent a lot of time waiting for the other shoe to drop, and I wanted to enjoy everything before it all ended. That attitude completely destabilized my business – but I wasn’t savvy enough to understand that at the time. Fortunately, I recognized that I wasn’t going to be able to fix this without some help.
I was unbelievably smug in year three, but I was all ears in year four.
What did I do to change things?
- I joined the Entrepreneurs Organization. If you have over 1MM in ARR, you should consider this. It will change your business, and probably it will also change your life.
- I completed a nine month MBA program. The SBA offers one, and it’s free. You need to apply to a cohort in the city you live in, and upon completion you will need to report on your growth quarterly for several years after completing the program. The follow up is moderate – questionairre style and takes ten minutes. The program involved about 100 hours of classroom time, and an equivalent amount of home study.
- I was mentored in financial literacy. This was an incredibly generous offer from one of my peers. I met with my peer once a month, every bank statement in hand, and I had to explain every purchase I’d made. To this date I can’t spend money without thinking “Richie will yell at me for buying this, I haven’t paid my visa bill.” That extra accountability was habit forming, and saving money is easy now.
- I hopped on the Traction/EOS bandwagon. It was the best investment I made in our business. Now we’ve changed to StratOp, and we work with Ian Richardson.
- I removed myself from the day to day operations of the business and learned how to trust my team. I can’t do everything, and what’s the point of having your own business if you have to do all the things you hate? Find your genius zone as soon as you can.
- I gave myself a raise and stopped looking at company money as “mine”. The only money that’s “mine” is my salary. The rest of it stays in the business, shenanigan-free.
Through strategic planning, I learned about what I valued – and it wasn’t money.
I value freedom.
I did not want to keep running my company even one day longer than I liked doing it.
And I learned that wanting that choice available to me meant I needed more liquidity than most people. That required me to change how I looked at money, and I learned how to keep my overhead low and my cash reserve high. I had one very challenging year where I incurred a lot of personal debt to make some key hires, and that is the same year I changed my approach to how I ran my “lifestyle” company and started working towards building a vehicle for long term financial freedom. We doubled in size that year. I paid off all that debt. We increased our profitablity by 600%.
Sell Your MSP in Five Years – Strategic Planning For Business Owners
Strategic Planning Leads to Success – Learn How You Can Prepare to Sell Your MSP Using a Strategic Plan in This On Demand Webinar Featuring Ian Richardson From Doberman Technologies: Strategic Planning for MSPs
“What’s Your Number?”
You hear people having the conversation in peer groups a lot. It’s impossible to track your sucess if you don’t know what success looks like.
In 2017 I would have described my level of success as:
“I no longer need to look at my bank balance or budget before I spend $1000.00.”
In 2018 my income level was:
“Holy sh–, I overextended myself significantly here.”
In 2020, my current financial status is:
“I can buy anything, but I can’t buy everything.”
In 2025, I hope to describe my wealth as:
“My financial future is secure forever at my current level of comfort even if I make some terrible financial choices, and I don’t ever have to set an alarm clock.”
My story isn’t over yet. I haven’t hit “my number”.
If you don’t know how much money you need to retire at the lifestyle you want, it’s time to talk to someone.
I’m not a wealth manager, I don’t even have a wealth manager.
I know how much money I need to make in order to live a life I’m comfortable with, and how much I need to live a life that would be extravagant. My “number” is somewhere in the middle, and highly contingent on the amount of work I’d need to do moving forward to hit it. I can retire right now if I don’t want to do any more of the things on my bucket list.
If your “number” factors in paying for a yacht and a ski chalet, our paths are a little different – but you’ll still need to do a lot of the same things I did to create a business that will be desirable to a buyer. And I will start my next business differently. Intentionally. With professional guidance every step of the way. It’s nice to have a runway for something new combined with “real life” education. I learn the hard way. (Which it turns out is also the expensive way.) Check out this blog post to learn more about how you can plan to sell your MSP and why strategic planning for your MSP will help:
Intentional Strategic Planning for Your MSP
Female Business Owners, Start Talking About Money More Often
A friend told me recently that I talked about money more than most people he knew, and that it made me sound arrogant to those with less, and foolish to those with more. I did take that to heart, but I believe women are discouraged from discussing money.
It’s not “nice”.
I’m proud of what I built, and I want other people to realize that building a viable, profitable business from nothing is possible. I don’t think you can really talk about selling your company without talking about money. I encourage women to talk about money more often.
Income inequality thrives in secrecy. Want to sell your MSP for the same amount as your male counterparts? Start talking about money more often.
Talk to your daughters about money. Teach them how to budget and save and plan. I left home early. My family didn’t talk about money.
We do now. I also feel there is a lot of pressure on women in business to “prove themselves”. It’s okay to not want to be a unicorn. It’s okay to not want to work more than eight hours a day. It’s okay to want to parent more than you want to work. And it’s also totally okay to want to “crush it” and buy your own helicopter. (If you do this, please invite me to ride in your helicopter!)
What Advice Do You Have For Others Working Towards An Exit?
My biggest piece of advice to anyone before you sell your MSP is to remember that you can’t spend the money if you’re dead. If you haven’t already, start forming healthy habits now in your personal life. One thing Jim Turner is absolutely going to share with you is his road to physical fitness, and the amount of joy it brings him.
Tips Before You Sell Your MSP?
- If you want your marriage to survive past your exit, prioritize it ahead of your business.
- One of the things I did right, even if maybe it wasn’t always the right choice for the business? I spent every summer traveling with my kids.
- Get mentally healthy. Exiting won’t fix the issues that your business helped you ignore. Having money and time and big fat personal demons is a recipe for a spiral you might not pull out of. I’ve been in a 12-step program for 16 years now – you’d be surprised (or maybe not) at the number of people who end up in treatment in their 50’s after a successful career.
- Find things you are passionate about before you exit. Selling your business leaves a business-shaped hole in your life. I have defined myself for years as a CEO. A business owner. An entrepreneur. Be ready for the weird emptiness that comes after you exit.
Finally, remember that you can’t compare your reality to a carefully curated snapshot of someone elses’ exit.
2 Million? That’s Nothing!
(It’s actually really really good if you are an MSP – there are 80,000 ITSPs in America. Only around 6000 of them generate more than 1.5MM in ARR)
You may be well past the 2MM mark in your company. Awesome! You’ll find a huge amount of value listening to Jim Turner from Hilltop Consulting share how he was able to grow his 5MM MSP into a 20MM MSP in under 5 years.
I’m looking forward to hearing about how he did that as well!
(Register here: https://app.livestorm.co/sales-pros/retire-in-five-years )
Content from the Managed Sales Pros archives on preparing to sell your MSP
Check out:
Streamlining Payment Processing Can Better Prepare You To Sell Your MSP
The Shortcuts to MSP Sales Success
The Exact Right Perfect Combination of Marketing Things for MSP Sales Success
Just Starting Out? Get Our Managed Services Sales Script Here!
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