Selling your MSP is like dating – at first, it’s exciting, full of big promises, and everyone’s on their best behavior. Then, suddenly, you’re knee-deep in financial audits, legal jargon, and awkward conversations about your future. If you’re not careful, you might just end up selling your business for peanuts and a handshake. (Trust me, I’ve been there.)
So, before you dive headfirst into the world of M&A, here’s a checklist of what you need to do to prepare – plus a few lessons from my own mistakes.
1. Get Your Financials in Order
If your books look like a toddler got hold of your accounting software, you’re in trouble. Buyers want clean, clear, and organized financials.
What I did wrong: I once handed over a spreadsheet labeled “Final Profit Numbers 3.0 – ACTUAL FINAL.xlsx” that was anything but final. The buyer took one look and said, “We’re going to need a real accountant for this.” Lesson learned: hire a pro and keep your books tidy!
2. Determine Your Non-Negotiables
Before you even start talking to buyers, figure out what matters most to you. Is it the highest possible payout? Taking care of your employees? Ensuring your clients don’t get ghosted?
What I did wrong: I thought I could “wing it” in negotiations. Turns out, when a buyer starts talking about cutting staff or slashing service levels, it’s a bit late to figure out what you actually care about. Know your priorities upfront.
3. Understand Your MSP’s Valuation
Your business isn’t worth whatever you feel in your heart. It’s based on EBITDA, revenue trends, and client contracts. Understand how buyers will value your MSP and don’t get blinded by pie-in-the-sky numbers.
What I did wrong: I once mentioned a ridiculous price in a meeting, assuming we’d “negotiate down.” The buyer chuckled, said “Nice try,” and walked away. Oops.
4. Review and Strengthen Client Contracts
A buyer wants recurring revenue, not a house of cards. Make sure client agreements are solid, long-term, and transferable.
What I did wrong: Some of my contracts were handshake changes to existing contracts. When a buyer asked for signed agreements, I mumbled something about “trust-based relationships.” That didn’t fly. Get your paperwork sorted.
5. Assess Employee Impact & Retention Strategies
Buyers love a business that can run without its owner. But they also love cutting costs. If you care about your team, plan ahead.
What I did wrong: I assumed my employees would be “fine” post-sale. Some weren’t. If you want them protected, negotiate it into the deal.
6. Prepare for Due Diligence Requests
Buyers will ask for everything: financials, client lists, contracts, and possibly your firstborn. Have a well-organized data room ready.
What I did wrong: I sent documents one at a time via email. After the 17th request for “one more thing,” I realized I should have prepared everything in advance.
7. Review Your Tech Stack & Processes
Buyers will want to know what software you use, how your processes work, and if there’s a transition plan.
What I did wrong: My documentation was pretty good, but I realized my tech stack had become over-complicated during the buyout process. In hindsight, I lost some profits that I only noticed during the final phases of the M&A.
8. Think Through Your Role Post-Sale
Do you want to stick around for a year to help with the transition? Or do you want to take the money and run? Figure it out before negotiations.
What I did wrong: I assumed I’d be done on Day 1. Then I found myself stuck in “advisory mode” for a year. Know what you’re signing up for!
9. Evaluate Potential Buyers Carefully
Not all buyers are created equal. Some genuinely care about your business. Others will strip it for parts and leave your team hanging.
What I did wrong: I almost sold to a buyer who had a history of gutting MSPs. Luckily, I did some digging first. Check references, talk to their past acquisitions, and trust your gut.
10. Consult Legal & Financial Advisors
I don’t care how smart you are – hire professionals. A good lawyer and accountant will save you from making costly mistakes.
What I did wrong: I initially tried to “save money” by DIY-ing parts of the sale. That cost me way more in the long run. Pay for good advisors – it’s worth it.
