What was your MSP and when did you start it?
I started Hilltop Consultants in 2003. I had been working for an IT consulting firm and like many techs, felt that I could do just as good of a job running a business as my boss. I started taking on small clients that were referred by my friends. Once I had enough clients, I quit the consulting firm and focused on Hilltop Consultants full-time.
Can you explain a little about the business?
When I started Hilltop Consultants, we were a T&M shop that would work with any client that would hire us.
When I sold Hilltop Consultants, we were the largest legal focused MSP with close to $20 million in revenue.
At our peak, we had 135 employees.
Were you always planning on an exit and what was the driver to exit?
I was not always planning on being acquired. My buyers presented a great financial offer and showed an understanding of what our team could become. The buyer, Frontline Managed Services is now a $90 million per year provider of managed IT, managed financial services, and is the leader in the legal vertical.
How did you find your acquirer and what did the process look like?
A consulting firm engaged by the PE buyer contacted me and setup the first meeting in our office. I then met with the buyers a couple of times at their office and at legal conferences.
Can you tell us a little about your exit?
Cash deal with Equity rollover option. I chose to roll equity since I believed that the company has a great future.
What was the main thing you learned about M&A going through the process?
Control your expenses to increase EBITDA!
Make the hard decisions before you sell.
Knowing what you know today, what would you have done differently?
I would have outsourced my helpdesk and NOC
Is there any advice or things to watch out for that you would like to share with fellow MSP Business owners?
I would never take an earnout deal!
If you don’t have control of the surviving company, you don’t have control over it’s ability to pay your earnout.
If the new company makes poor decisions, you may lose the money they owe you.
Get the money up front.
Rolling some money into the deal is fine, but you need to understand the terms of that investment and how it will pay out.
What are you up to now and how can people find out more?
I am now coaching and investing in other MSP’s. I am also a Strategic Technology Advisor for Bridgepointe Technologies. I want to help other MSP owners maximize MRR and decrease expenses so that they have better exits.