What was your MSP Business and when did you start it?
Doberman Technologies LLC, Founded 2005, Full time in Business 2010.
Grew up in a Healthcare Household (Dad was MD, Mom was a NICU Nurse), Got started in Business IT helping my Father install one of the first EMRs in the state of MI.
Can you explain a little about the business?
We were a pure play MSP with a Healthcare IT Vertical Focus.
Focused mainly in the Mid-Michigan Geo Space (Lansing and surrounding MSAs).
We fluctuated in size, but mainly had around 10-12 staff for most of my time there. We had Private Medical Practices, Manufacturers, Construction, Insurance Companies, and Associations for most of client base.
We did traditional Managed Services Work (Professional Service/ Projects, HW SW Sales, Fixed Fee Services like Helpdesk, NOC, Security, Backup, etc.)
We also had a Compliance Management Arm, and strategic IT Planning services on top.
Were you always planning on an exit and what was the driver to exit?
Somewhat – Started planning around sale of the business when I joined HTG in 2016 through that organization. I went through an UGLY divorce starting in 2019 and had to get more serious throughout that process. After that finalized end of 2020 realized I had lost passion for the business. Mid 2021 (Summer) decided to sell and started working towards that in Earnest come August / September of 21.
How did you find your acquirer and what did the process look like?
My Brother bought my MSP. He had been in the business since the start. We came to an agreed upon price then retained a Finance Broker to sherpa us through the SBA 7A loan process.
Intense work for Oct-early December of 21, then we had around a 2 week “cruise to close” period right before the end of the year.
We had to do a lot of documentation collection to be able to secure the loan – updating business plans, financial models for the next 36 months, book clean up, valuations, game theory around certain situations and circumstances.
It was a big drink from the firehose situation.
Can you tell us a little about your exit?
We did a Cash Up front structure for the organization with no earn out. There was about a 50K held back funds so he had operating capital that is being paid back over time.
I was involved heavily for the first 4-5 months post transaction, then gradually worked out of the business. At the time of this writing, I have no involvement out of “talks over dinner” type activities between my brother and I.
What was the main thing you learned about M&A going through the process?
A deal can be done EITHER when both parties are mutually unhappy, or when one party (Buyer or seller ) is truly determined to get to the finish line.
The Bank holds all of the cards in a sale / purchase – If you’re getting outside financing their concerns trump yours.
Always better to have a longer timeline than a shorter timeline for sale of a business If you document and plan up front, your sale will go smoother
Knowing what you know today, what would you have done differently?
- I would have sold in 2019 during my divorce – We went through a bit of churn over the pandemic, I would have had a better exit 2 years prior.
- Also, I would have run my business far more tightly in terms of items I ran through the business / expense load.
- I would have budgeted and done cashflow projections far more routinely.
- There are no silver bullets in business – I could have saved myself a lot of time if I had slowed down to move more quickly towards my goals versus trying to find a shortcut.
Is there any advice or things to watch out for that you would like to share with fellow MSP owners?
- Start making an exit plan NOW so you can sell when you WANT, versus when you NEED.
- Start getting intentional about business planning and working “On the business” right away – I can’t overstate how much EASIER it is to run a business with proper documentation, planning, and infrastructure.
- Don’t be afraid of debt financing to give yourself the financial resources for strategic hires and investment.
- You can’t invest enough time in coaching and building up your team – double your current time spent in these areas.
- Read constantly – there is so much knowledge in books, blogs, and other resources that you can learn for little to no cost outside of your time. Knowledge is a superpower in business.
- Get a common business planning language and toolset for your leaders – They need it.
What are you up to now and how can people find out more?
https://randr.consulting is our website. My wife and I have started Richardson & Richardson Consulting to impact the world legacy business for our final “rodeo” in the space.
We believe we can change the world through helping entrepreneurs, and that’s what we’re aiming to do.