Good evening, channel partners. Welcome to ChannelE2E Podcast 059 — our latest conversation with Service Leadership Inc. CEO Paul Dippell. We discuss VAR and MSP valuations, along with M&A trends based on Service Leaderships latest market data.
The good news: The IT channel is filled with M&A activity. The potential bad news: There could be a flood of sell-side companies as Baby Boomers look to exit their businesses. Overall, it's a healthy market for those who smartly navigate it. Here's the podcast:
If you're hoping to scan the podcast here are some key time points:
- 00:00: Introductions
- 01:00: Who Is Paul Dippell? His history as an IT service provider and now as a consultant to the industry.
- 02:15: M&A Valuations: What Paul is seeing.
- 04:00: Multiples of revenue vs. multiple of EBITDA
- 04:25: Product resale, T&M services, 'real' managed services and more.
- 05:00: How much $1.00 of reseller revenue is worth in M&A.
- 07:00: Break-fix hourly support revenue: How much is that worth in M&A?
- 07:37: Professional and project services revenue: How much is that worth in M&A?
- 08:00: How much is managed services revenue worth in M&A?
- 12:00: Top-performing MSPs. What are their revenue mixes and valuations?
- 13:00: The top one-quarter of MSPs: What are their profit margins?
- 13:45: EBITDA multiples: What is the valuation for top MSPs?
- 14:45: EBITDA multiples placed in three categories: Low-performers, better performers and best performers. And what it means to valuation.
- 17:50: Why 2015 was a peak year for 2016. Can 2016 and beyond beat it?
- 19:25: Why valuations have been rising.
- 20:40: What's causing the current M&A explosion.
- 23:00: Why Equipment Manufacturers get into managed services. And out. And in.
- 25:00: Why M&A is trickling down to smaller MSPs.
- 26:55: Myth 1: Cloud's impact on MSPs and their customers.
- 30:00: The Amazon Web Services reality check.
- 33:20: Myth 2: Managed services commoditizes?
- 36:50: Deal Flow M&A: It's rocking and rolling.
- 37:30: For resellers and VARs: M&A trends.
- 38:20: The aging solution provider, and the impact on M&A.
- 40:40: A lot of sellers in the M&A market: Is that bad for valuations?
- 46:05: Tracking Service Leadership's next moves.
- More time line updates coming shortly.
ChannelE2E Podcasts: Who Says What?
Our podcast guests educate IT entrepreneurs and IT service providers about business development, management, transformation, partnering, growth and exits. Each CEO, executive or financial advisor personally drove:
- Company Launches — vision, mission, passion.
- Funding Stages — boot strap, friends and family, angel investments and venture capital.
- Expansions — core team building, process building, automation and partnering.
- Exits and transformations — IPOs, mergers, acquisitions and private equity deals.
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