Evergreen Services Group has acquired The Final Step (TFS), a top IT MSP (managed service provider) in London, UK.
Evergreen is a family of managed services and software companies funded by private equity with a buy-and-hold philosophy. Their slogan is “A Permanent Home for Your Business and Leaders.”
The Final Step acquisition marks Evergreen’s expansion into the UK market.
This is technology M&A deal number 244 that ChannelE2E and MSSP Alert have covered so far in 2023. See more than 2,000 technology M&A deals for 2023, 2022, 2021, and 2020 listed here.
More on Evergreen and The Final Step
Evergreen said it partners with owners of services and software businesses to provide operational assistance and capital in support of growth and exceptional service delivery. Evergreen said it differentiates itself by providing a permanent home for businesses that care deeply about their customers and employees.
The Final Step was founded as a sole proprietorship in 1987 by Raja Pagadala. The company has been a Microsoft Partner since those early days, and it still has clients from that first year of operation. In 1997 Pagadala incorporated The Final Step. As a company certified in both Novell Netware and Microsoft NT, The Final Step was well positioned to help companies migrate from Netware to NT.
Later Pagadala brought the HTG Peer Groups (now known as the IT Nation Evolve peer groups) to the UK with the first meeting held in October 2008. He also facilitated the Connectwise UK User Group (Five Hours Ahead) for 10 years.
Why Evergreen Chose The Final Step
Evergreen CEO Jeff Totten told ChannelE2E that the UK marked the next logical market for expansion for Evergreen. The company expanded into Canada first in 2021.
“The UK is the next natural step for us,” he said. “It’s a sizeable market. It’s growing and we are growth oriented. It’s a market where the Evergreen story resonates with partners.”
Totten noted that there are 7,000 MSPs across the UK, and from a growth standpoint, there are opportunities in data security and AI.
The Final Step’s customer focus made the company an attractive target for Evergreen.
“The Final Step is customer obsessed,” Totten said. “It was all about the customer, how do we do right by the customer.”
Totten acknowledged that the MSP M&A market has cooled somewhat, due to market conditions. Inventory has declined in terms of businesses available for sale. But Totten is still bullish on the MSP space.
“We have 70 business owners that we can serve up as references,” Totten told ChannelE2E. “We have a team that is helping business owners think about their transition.”
In his official prepared statement, here’s what Totten said about the deal: “We are thrilled to kick-off our UK expansion with the acquisition of TFS. The UK is a natural next step for Evergreen following our success partnering with technology services companies across the US and Canada. We have been thoroughly impressed by the wonderful company that Raja, Luisa and their team have built. TFS's deep commitment to putting customers first makes it an ideal partner company to launch Evergreen's UK effort."
Raja Pagadala: A Perspective from The Final Step’s Managing Director and Founder
Pagadala said that he chose Evergreen because its management listened to his concerns. At IT Nation Secure Pagadala had the initial discussion about the potential deal, first speaking to Craig Fulton, the former ConnectWise executive who recently landed at Evergreen. He also met with Sydney Hockett, VP of M&A at Evergreen during the event. He did a video call with Ramsey Sahyoun, cofounder and M&A partner at Evergreen.
“I think their culture comes through when you’re talking to everybody. There’s a good fit with the culture from The Final Step and what Evergreen are trying to do,” Pagadala said.
He also spoke to MSPs from Evergreen’s previous acquisitions to ensure it was the right decision for his company.
“Private equity, particularly in the UK, has a very poor reputation,” he said. “It’s viewed with suspicion. ‘Is my job safe?’ ‘Are they just going to come and asset strip but not look after the clients?’ You can see from Evergreen’s ethos that isn’t what they were going to do,” Pagadala said.
Rather, Pagadala views this as the next phase for The Final Step. Pagadala said he was glad to be able to share some of the proceeds of the deal with his management team. Following the transaction Pagadala will move into the chairman role and longtime employee Luisa Marques will take over as managing director of The Final Step.
“She started with us as an administrator, intending to just stay with us for six weeks. And 18 years later she has progressed through the ranks and now is taking over as managing director,” Pagadala said.
Reflections and Advice from Pagadala on the Entrepreneur to Exit Journey
Pagadala said when he started the business in 1987 he put a two-line advertisement in the newspaper that cost him £250 a week and it produced £12 worth of work. He remembers thinking, “This will be more difficult than I thought it would.”
Here’s what he recommends to earlier stage entrepreneurs who are experiencing struggles along the way:
“Peer groups like Evolve are so important,” he said. “It really accelerates growth and professionalism… Surround yourself with capable people.”
A final thought from Pagadala: “Good businesses thrive irrespective of the economic climate. Don’t get too bothered about factors that you don’t have control over. Focus on the things you do have control over. We are lucky to be in a sector that is critically required. Focus on the stuff you can have an impact on, not the noise.”
