M&A Highlights Day 1 of Kaseya Connect IT Global
Here are the top five key takeaways from day one of the event.
October 20, 2021
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Connect IT Global kicked off bright and early, with registration beginning at 8 a.m., ahead of the opening keynote. Partners mingled and munched, catching up over breakfast and coffee before heading into the main area for the start of the day’s events. The excitement was palpable, this being the first event of the year for many in attendance.
Fred Voccola, CEO of Kaseya, launched right into talking about the theme of the day, the state of mergers and acquisitions. One of the nice things about being a software provider, according to Voccola, is that Kaseya receives a lot of metadata from it’s customers. That’s data on how their products are being used and who is using them, who is growing, who is buying whom, etc.
Voccola also stated that there has been a steady increase in sophistication in the M&A process. It’s not that new, but now it’s a question of how to do it well. M&A is spiking, but it’s important to think of it as part of a rollup strategy. The M&A market for SMBs, in particular, is the second-fastest growing market in the world. The attributes of recurring revenue and margins creates the perfect type of asset.
“The SMB market is growing very, very rapidly,” said Voccola. “When you talk to small business owners, most [of them] recognize that their businesses are being digitally transformed, and need your help to do it. The SMB industry overall just passed the hurdle of being a technology-first industry, which means every incremental dollar that gets invested in the business, more than 70% of that goes to technology. This trend is going to continue through the decade. This will cause the private equity folks to salivate.”
Rick Jordan, CEO and founder of Reachout IT, and Kevin Harrington, the original shark from Shark Tank, delivered a talk on what it takes to scale a company and how one’s mindset in this new MSP landscape factors in.
With more than $1 billion in combined acquisitions, Jordan and Harrington hammered home strategies that can be implemented at any level and company size. They also shared some of their tried and true marketing techniques (while acknowledging that’s something that a lot of, if not most, MSPs struggle with), how they build teams, and how to access capital to go big in the MSP space.
“We’ve seen a substantial increase in the sophistication of the M&A process, which is a fancy way of saying a lot of private equity activity,” said Jordan. “There are a lot of rules that are happening, there’s a lot of acquisitions that are taking place. Valuations have never been higher than what they are right now. You are worth real money. Remember that.”
Gary Pica, president, TruMethods, spoke with Kaseya CFO Kathy Wagner about the implications of an MSP’s financial data, organizations, and reporting on all aspects of an M&A transaction.
The session covered several important aspects:
The importance of preparing your financial and corporate information before the process.
How to position financials in the best possible way to maximize your value.
Common “gotchas” to avoid during the process.
“Capitalize on recurring revenue,” said Wagner. “The first thing you should do is make sure you have your basic financial statements together, and make sure you have a forecast of where you think your business is going. Why? Because you can trade a little bit in the future. And you don’t have to have to have operational plans behind those numbers. Nobody looking for a company that’s going to be “pie in the sky” type of growth or anything like that. But you need to have all of those sorts of things in order.
“You also want to make sure that you’re running your business separately from your personal finances — you want to disentangle those trends. You want to make sure you have contracts that are assignable. And you really want to be tight on what your ARR is. Right now, that’s the biggest number that everybody is looking at.”
In a panel composed of Neil Medwed, executive director of strategic partnerships at Meriplex; Will Slappey, CEO, Slappey Communications; Jim Lippie, CEO, SaaS Alerts; and moderated by TruMethods’ Gary Pica, the buying and selling journey was discussed at length. These investors, buyers, sellers and aggregators in the MSP M&A space drilled down into why different buyers have different targets and different buying criteria based on their thesis.
“The quality of your business is going to be measured by the quality of the people you have,” said Lippie. “If we want to scale up to hundreds of millions of dollars, there are people relying very much on the team that is running the business. As these businesses continue to scale, we’ve tried to create the tools to help them do so. So we built our whole model around that, and included things to make them want them to stay with us. That’s my formula.”
In a panel composed of Neil Medwed, executive director of strategic partnerships at Meriplex; Will Slappey, CEO, Slappey Communications; Jim Lippie, CEO, SaaS Alerts; and moderated by TruMethods’ Gary Pica, the buying and selling journey was discussed at length. These investors, buyers, sellers and aggregators in the MSP M&A space drilled down into why different buyers have different targets and different buying criteria based on their thesis.
“The quality of your business is going to be measured by the quality of the people you have,” said Lippie. “If we want to scale up to hundreds of millions of dollars, there are people relying very much on the team that is running the business. As these businesses continue to scale, we’ve tried to create the tools to help them do so. So we built our whole model around that, and included things to make them want them to stay with us. That’s my formula.”
KASEYA CONNECT IT GLOBAL — Kaseya, the IT management software provider, kicked off its annual event Tuesday in Las Vegas. The conference is happening this week at the MGM Grand in Las Vegas, as well as virtually.
Kaseya Connect IT aims to arm IT professionals with tools they need to not only grow, but thrive.
Kaseya also announced a few key enhancements, including several within its professional services automation (PSA) solution, BMS, that strengthen its comprehensive IT Complete suite of integrated tools for the IT professional.
“Anyone who wants to scale their organization and learn from the best should be here,” said Fred Voccola, CEO of Kaseya.
The event boasts roughly 3,000 attendees between those in-person and virtual.
Click through our slideshow above to check out the highlights from day one of Connect IT Global.
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