MSP 501 Profile: Ntiva Acquisition Strategy Moves to Integration During Pandemic

Company Name: Ntiva
Company MSP 501 Rank: 210
Founder and CEO: Steven Freidkin
Headquartered: McLean, Virginia
Primary Services:

Twitter: @Ntiva

Ntiva‘s acquisition strategy led the MSP to acquire five other companies prior to the COVID-19 pandemic.

The onset of the pandemic accelerated the integration of the companies to create one Ntiva. The acquisition strategy added about 80% of the company’s revenue.

Ntiva’s latest acquisition is eGuard Technology Services, a managed IT services provider based in Washington, D.C. Ntiva is continuing its expansion in the Washington, D.C., market and eGuard Tech’s local presence assists with this goal.

Ntiva’s Steven Freidkin

As founder and CEO Steven Freidkin points out, the MSP‘s key pillars are its acquisition strategy, and organic sales and marketing. The company wanted to be a “consolidator, not a consolidated.”

In a Q&A with Channel Futures, Freidkin talks about his company’s acquisition strategy and challenges during the pandemic. He also talks about turning a nightmare client into a dream client.

Channel Futures: What new opportunities and challenges came with the global COVID-19 pandemic?

Steven Freidkin: For Ntiva, the biggest opportunity that presented itself was our impetus to create one Ntiva. Over the past year, pre-pandemic, we had acquired five companies. Although we were already deep into integration plans with all of them … [they] were operating separately.

The pandemic gave us a chance to accelerate the integration timeline by breaking down the physical barriers, due to multiple locations, that were in place before. Additionally, it gave us an opportunity to really step up our communication and pull our team members together in a stronger culture.

In the first month [of COVID-19] alone, we saw our volume triple, our revenue decline, and our cash flow dry up significantly. We lost customers who went out of business. We deferred revenue for some of those who could not pay. And we reduced scope significantly for many.

At the same time as these adjustments were being made … we were still firing on all cylinders with regards to sales and marketing. We did not reduce the marketing budget, or let go of any sales or marketing resources.

As a result, we continued to onboard a significant number of clients during this time period, offsetting almost 100% of those losses. Even though we did not grow the business during that time period, a ton of work and effort went to into stabilizing the business from a performance perspective.

CF: What was the single biggest technology or business decision that drove your company’s growth in 2019? How did it do so?

SF: We have always had the vision of creating a company that exists to grow people, both personally and professionally, using technology as the accelerator. The strategy we put in place to achieve this was based on two key pillars — organic sales and marketing, and acquisitions. Both of these pillars, as I call them, really came together in 2019.

While every business needs what we do, we needed those same businesses to know who we were when they were looking for IT services. So we invested heavily in marketing for brand awareness purposes, as well as building out the sales team who could determine the right opportunities to go after and get them closed.

Even though we first started to invest in this in 2017 and 2018, 2019 was really the first year we saw it all come together. And really, this investment was what set us up for success during the pandemic in terms of new business development. If we had not made this particular business decision when we did, we would have been coming from way behind.

The other pillar came about from understanding how …

… fragmented the industry was. As a relatively small MSP, we were in the top 200 of over 25,000 MSPs in the U.S. But we understood that this fragmentation coupled with the maturity of the industry was going to result in consolidation.

This was similar to the telecom industry in the 1980s. There were at least 20,000 mom-and-pop shops throughout the country, and of course there are now far fewer. We knew our own industry was ripe for it and frankly already consolidating. So in order to stick to our core of wanting to grow people, we knew we wanted to be a consolidator, not a “consolidated.” We were able to hit hard in 2019 on executing closures on a number of acquisitions.

CF: Have you ever turned a nightmare client into a dream client? Tell us how.

SF: We had a client back in 2015 with maybe 50 or 60 employees. They wanted just the basics when it came to IT, really just the minimum they could get away with when it came to paying for managed IT services. They were paying about $4,000 a month for recurring services at the time.

We were nervous going into this because we knew they looked at us as just a utility who would be there only to keep their stuff up and running. A good client is one who recognizes that technology is key to their growth, and has none or just some of the resources to carry this through. This client was definitely not in that bucket.

But, we saw this as an opportunity to help them recognize that technology could help them get better business results, in terms of enhanced revenue and profitability.

We went in and suggested that they invest in upgrading their infrastructure to better support what the developers were doing. But they said absolutely no way, due to the cost. Any time we suggested any improvement at all that would cost them one penny more, we were shut down. This is a nightmare client — someone who will not listen, yet when something goes wrong, we likely will be blamed.

It was the developers who ended up helping us to convince the leadership that they really needed the improvements.

They became a dream client in two ways. First, they went from about $4,000 a month to $24,000 a month in recurring revenue. Second, in one of our next meetings they thanked us for pushing them to move forward, and told us that they trusted us to tell them what they needed to do correctly. They wanted to us to tell them what it would cost to do improvements perfectly moving forward. And then they would decide if they wanted to do it or not, but they wanted the best suggestions.