Scott Scroggin, Director of Strategic Initiatives at ConnectWise, discussed the current M&A landscape for MSPs, highlighting high valuations and strong M&A activity despite some uncertainty due to AI and hyper-automation. He noted the scarcity of high-quality partners and the increasing role of private equity. Scroggin emphasized the importance of smaller MSPs leveraging AI for business consultancy to enhance their valuation. He introduced the Evolve Essentials program for MSPs with $7 million in revenue, providing an 18-month curriculum and benchmarking tools. The IT Nation Grow program focuses on business transition, aiming to help MSPs navigate transactions and secure positive outcomes.
Action Items
- [ ] Promote the "Evolve Essentials" program to smaller MSPs.
- [ ] Follow up with MSP owners to help them understand the full financial implications of a business transition.
Outline
Macro Environment and M&A Landscape for MSPs
- Jamar Freeman introduces Scott Scroggin, Director of Strategic Initiatives at ConnectWise, and asks about the M&A landscape for MSPs, including valuations, AI capabilities, cloud, and cybersecurity.
- Scott Scroggin thanks Jamar and mentions the positive state of the M&A market, with high valuations and interest rates expected to stabilize.
- Scott highlights the scarcity of high-quality partners for acquisition and the increasing involvement of sophisticated investment bankers and private equity platforms.
- He discusses the uncertainty around AI and hyper-automation and how smaller MSPs can leverage AI to increase their valuation and provide business consultancy services.
Opportunities for Smaller MSPs and Industry Trends
- Jamar Freeman asks about the ability of smaller MSPs to provide solution-oriented services rather than just break-fix services.
- Scott Scroggin explains the evolution of peer groups, including the introduction of Evolve Essentials for smaller MSPs, which provides an 18-month curriculum and benchmarking tools.
- He emphasizes the importance of benchmarking to understand industry standards and set growth goals.
- Scott mentions the criticality of surpassing the $1 million revenue barrier for smaller MSPs to scale and join more advanced peer groups.
Support and Resources for Smaller MSPs
- Jamar Freeman summarizes the positive macro environment for valuations and the support available for smaller MSPs.
- Scott Scroggin stresses the importance of early planning and preparation for business transitions, especially for smaller MSPs.
- He introduces the IT Nation Grow program, which focuses on business transition and helps partners understand the financial implications of transactions.
- Scott highlights the need for partners to be well-prepared to ensure a positive outcome and build a legacy for their future.
Final Thoughts and Accountability
- Jamar Freeman and Scott Scroggin discuss the common misconception among MSPs about the financial returns from business transactions.
- Scott emphasizes the role of peer groups in providing accountability and direction for business owners.
- He reiterates the importance of planning and preparation to achieve positive outcomes and build a successful legacy.
- The conversation concludes with mutual appreciation and a commitment to supporting the growth and success of MSPs.