Who are you and what is your job?
Steven, I am the CEO and founder of Ntiva, a business that officially started in 2004 but had its origins as far back as middle school. I work with leaders, managers, and employees across the company to deliver technology solutions to commercial clients all with the guiding ethos that we, at Ntiva, exist to grow each other and we utilize technology as the means to do it.
What is your business and what do you do within the MSP space?
We are a managed IT services business providing the “full stack” of cloud, security, and traditional managed IT services to SMB clients across a broad spectrum of industry verticals.
Our purpose and mission simple – we exist to grow each other and utilize technology in the pursuit of that goal. The origins of Ntiva started back in middle school when I was mistaken for a CompUSA employee (remember the red shirts). Ntiva started officially in 2004.
Can you explain a little about the business?
Ntiva is a leading IT services company that provides businesses across the U.S. with advanced technology expertise and support, including managed IT and security services, strategic consulting, cloud solutions, and unified communications solutions. Ntiva’s world-class team genuinely cares about the relationships they build and understands that response and precision are fundamental keys to successful partnerships. Ntiva’s ultimate objective is to help clients leverage their technology investments to improve business and organizational performance and to empower growth and stability.
The business currently has over 400 employees and supports clients nationwide with offices located in Colorado, Illinois, Maryland, New York, Virginia, and Washington, D.C.
How do you see M&A activity within the MSP industry right now?
Recognizing that we are entering a period of fluctuation and uncertainty – with the potential for a recession looming – we continue to see elevated M&A activity across the space, regardless of transaction size. Now, despite the pace of activity, we have seen some contraction in the valuation multiples from high levels seen even six months ago, and some transactions are taking longer to close.
Although time will tell, we have not yet seen a meaningful decline in dealmaking activity.
What advice would you give to MSP owners that are looking to plan for an exit?
Preparation well in advance is critical. It is important that an owner has a clear-eyed perspective on post-transaction goals (financial, employment, employee and client impact, etc.) to inform preparations and decision making. It is also important to recognize the different types of buyers in the market, and their preferences. This will inform the owner on what type of buyer – strategic, PE-backed platform, or PE-direct investment – may make the most sense for his or her business. Generally speaking, if an owner can demonstrate majority MRR contribution, strong margins, healthy growth, low client concentration, high client retention, low employee attrition, and well-managed financials and contracts, then that is seen as attractive to any buyer. Lastly, the non-financial attributes of a business (e.g., the culture), including the ability to find a buyer who aligned with those attributes, provide the greatest opportunity for long-term transaction success for all stakeholders involved.
How can MSP owners start adding value to their MSP now, to maximise their sale value?
As noted above, the financials and operational attributes of the business are those that can, generally speaking, generate material value for the business.
What can MSP owners do now within their business, that will ultimately support an exit?
Rather than thinking with the lens of what can generate maximum value or the owner first, the perspective should concentrate on what can generate maximum value for clients. That way, an owner can position their offerings at a relative premium (given the high value generated for clients), and ensure supportive margins, growth, client retention, etc. – all of which can generate positive incremental value for an owner in a sale.
Can you tell us a little about your exit?
After growing organically through referral for the first ~12 years, I first sought outside capital in 2016 to accomplish several goals:
- Help get access to capital to execute acquisitions – we recognized how fragmented the space had become and knew consolidation was occurring. Because we exist to grow each other, which was different than most, Ntiva wanted to be a consolidator and needed backing to do so.
- Use capital to proactively invest in automation to continue to elevate our technical talent to do that which only they can do – helping our clients select, deploy, and support technology that helps them grow.
- Bring in a partner with experience building sales and marketing the right way. We didn’t have anything in place before and recognized that everyone needed what we do but very few knew who we are. We wanted brand recognition and solutions consultants to identify and close the right new business.
In January 2022, having grown from 80 employees (and $16mm revenue) to 400+ employees (and $80mm+ revenue) – inclusive of 12 acquisitions – it was time to partner with a larger organization that would allow us to continue (or even accelerate) our growth trajectory while also supporting our mission and purpose to grow each other. PSP Capital is that new partner and since joining force, we continue to grow and have taken on our first acquisition (and 13th overall). Not only does PSP Capital continue to help with the aforementioned goals, but they are also doubling down in our commitment to grow each other, supporting investments that allow us to create meaningful jobs and opportunities across our country.
What was the main thing you learned about M&A going through the process?
Intentionality, honesty and trust are critical to a long-term successful outcome. Finding like-minded partners (whether MSP sellers to acquire, capital partners, or outside advisors) is vital.
Is there any advice or things to watch out for that you would like to share with fellow MSP owners?
Do not rush to partner without giving yourself the time to think through the potential long-term implications. Just because someone dangles massive amounts of money in front of you does not mean they will be the right partner. Recognize that when selling, you will be giving up some measure of control of your business, but it is about finding the right partner to give that control to, while also protecting the certain things that you wish to remain in control of (where possible).
What are you up to now and how can people find out more?
I continue to lead Ntiva as our CEO surrounded by one of the best teams in the industry: https://www.ntiva.com/managed-it-services-mergers-acquisitions