Mergers and acquisitions (M&A) are a reality for Managed Service Providers (MSPs) of all sizes. In a recent webinar with David Howard, an M&A specialist and associate at MK Link, David shared his experience and expertise on M&A, from why MSPs should consider it to key considerations when buying or selling.
We share the key points here.
Mergers and Acquisitions are part of MSP life – and if you run an MSP, the chances are you’ve been approached about selling at some point. Conversations about acquisitions are a natural part of the lifecycle of an MSP, providing opportunities for growth. Acquiring another MSP is a powerful way to expand your client base, scale operations, and enhance revenues.
Whether a business has a turnover of £100k or £ 5 million, the same M&A principles apply, and the only thing that can vary is the challenges smaller companies may face compared to large enterprises.
Client relationships are the most valuable asset, and retaining those clients post-acquisition is essential for ensuring the deal delivers the expected return. A strong transition strategy that covers communication, onboarding, support continuity and service alignment is key to maintaining trust and minimising churn during transition.
2. Staff retentionKeeping key staff engaged is crucial because they hold the operational knowledge, technical expertise and personal relationships that the clients rely on. If key team members leave during or just after an acquisition, it can disrupt service delivery, unsettle clients, and reduce the stability and value of the business. Staff continuity helps maintain confidence on both sides of the transaction.
3. Contracts & formalityWell-structured contracts provide clarity and security for both buyers and sellers. In smaller or owner-led MSPs, informal or rolling agreements can pose challenges, as the business may rely heavily on personal relationships rather than formal documentation. During an acquisition, this can create added risk, and clients may feel less tied to the new owner; terms could be unclear or outdated, and it can become harder for the buyer to predict long-term revenue.
Clear and formalised contracts will reduce uncertainty and help strengthen the value of the client base
4. Culture & integrationA shift in company culture, processes or support style can cause clients to feel unsettled, especially if the acquired MSP provided a very personal or familiar service.
To manage this, businesses need to plan communication carefully, align service expectations early and introduce key team members, and phase changes gradually rather than all at once. A carefully thought-out integration plan will help clients feel supported throughout the transition and reduce the risk of losing them.
Choosing the right deal structure is essential; common options include equity sales, asset sales or profit-sharing arrangements – each with different implications for liability and involvement. Minimising risk requires thorough due diligence, clear documentation and a well-defined earn-out criteria.
Elements such as costs, legal, brokerage and accounting and so on should all be proportional to the size and complexity of the deal. This ensures it remains commercially viable for both parties.
The most successful acquisitions rarely happen by chance. While listing sites exist, most deals are completed off-market through direct introductions, networks or referrals. This approach allows both parties to move quickly and keeps the process discreet.
It’s important to consider your ideal business profile when evaluating opportunities, such as: location, client size, recurring revenue, pricing and contracts, staff numbers, service offerings, and company culture. Understanding these factors upfront will help identify the best fit for growth or exit.
To maximise the success of M&As, timing and engagement are critical. Delays or lack of responsiveness can be a red flag during the process and may stall a deal. Once a business is identified as a good fit, face-to-face meetings and momentum are key to maintaining interest and result in a successful deal.
Having a clear definition of value is crucial, especially in terms of client relationships, contracts and financials. Being clear in these areas makes transitions smoother and a business more attractive to buyers. As mentioned earlier, rolling contracts or informal arrangements can increase risk and can reduce the perceived value.
It’s sensible to be aware of future regulatory and financial changes. Increased compliance requirements may push smaller businesses to consider earlier exits, while changes in tax or capital gains rules could influence the timing and structure of deals. Being proactive about governance, financial transparency and client relationships will ensures your well-positioned to maximise value when the time comes.
Mergers and acquisitions offer MSPs of all sizes a powerful way to grow, create value and plan for the future. Their success depends on careful preparation, understanding your business in detail, structuring deals thoughtfully and managing client, staff and cultural transitions effectively.
By taking a strategic approach and focusing on the elements that drive long-term value, MSP owners can turn M&A opportunities into sustainable growth and a rewarding exit when the time is right.
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