Strike While the Iron is Hot

There has been an incredible amount of consolidation in the cloud, data center, and MSP markets in recent years, and many experts are predicting a similar pattern of consolidation to continue in the near future. 

Increased competition is a major catalyst driving consolidation. In order for large service providers to remain relevant in a highly competitive market, while also meeting the demands of their financial backers, growth must occur both organically and inorganically. In recent years, we’ve seen executives shift their strategies to focus more and more on inorganic growth. Through acquisition, companies can more quickly build up resources and talent, secure market share, and improve overall market position. 

If you’re a small to mid-sized service provider, current market dynamics present opportunity for a lucrative exit.

While there are plenty of small companies for buyers to select from, many are willing to pay a premium for business that offer the right synergies and/or geographic positioning.   

However, while the current M&A market can be labeled as seller friendly, this trend will not last forever. As time goes on, more companies will reach a point where their service offering is competitive and growth through acquisition is no longer vital to their success. At that point, market leaders may hit the pause button on inorganic growth and choose to revisit when the market is producing more buyer-favorable multiples.

If you’re considering an exit, don’t be late to the party.  Be proactive. Start formulating an exit strategy, and implementing the necessary changes to position your business to be sold.

Not sure where to start? Read our resource article, How to Prepare for a Sale this Year.