Consolidation within the managed services provider (MSP) space is proceeding at an unprecedented pace.
Private equity investors and industry players alike are fueling a surge in mergers and acquisitions (M&A), attracted by the allure of recurring revenue models and the constant demand for sophisticated IT solutions. As a result, numerous platform MSPs have emerged, each employing unique strategies to expand their services, geographic reach, and talent pools.
ChannelE2E's ongoing series examines how these platform MSPs shape the industry through strategic acquisitions. Companies like The 20 MSP, Ntiva, and Brightworks IT have adopted various integration models, from fully rebranding acquired entities to allowing them to maintain their original identities under a unified brand umbrella.
In a sector where ownership and integration strategies are rapidly evolving, Intelligent Technical Solutions (ITS) offers an approach that emphasizes empathy, cultural alignment, and a thoughtful integration process, according to the company’s head of M&A.
A Personal Journey Shapes ITS's M&A Philosophy
At the heart of ITS's M&A strategy is Adam Kerrigan, who brings a deeply personal perspective to the process. Having founded his own MSP, which he sold to ITS in 2018, Kerrigan experienced firsthand the transformative impact of M&A on both professional and personal levels.
"I feel like I made a fairly good decision because I lost 80 pounds. I got out of a bad marriage. I got my nights and weekends back. I was able to start my hobby of competitive powerlifting," Kerrigan explained to ChannelE2E. "Along the way, I became a happier, more financially secure person."
This personal transformation fueled Kerrigan's passion for guiding others through the often tumultuous M&A journey. "Having gone through that and having it so radically change my life, that's why I work today with ITS guiding people through that process," he explained. "We've now done 17 [acquisitions] as of last month."
West Coast Focus and Strategic Expansion
ITS sets itself apart not only through its empathetic approach but also by its strategic focus on the West Coast. This regional emphasis leverages unique cultural, legal, and economic environments that influence business operations.
"We love the West Coast. We do have a presence in the Midwest—we're also in Detroit and Chicago. But, to my knowledge, we are the largest West Coast MSP," Kerrigan said. "Building on that recipe is something that is important to us."
The Human-Centric M&A Process
ITS's approach to identifying potential acquisition targets is multifaceted, combining traditional methods with innovative, relationship-driven strategies. While the company subscribes to broker email lists and investment bank communications, Kerrigan says personal connections are some of the most valuable ways to connect with potential sellers.
"Some of our relationships have come from some sort of connection, like a peer group relationship or collaborating years ago," he explained. "I would say over half of our relationships have come that way."
In some cases, Kerrigan has taken a more direct approach—cold-calling MSPs to establish a connection. "I probably called thousands of people... but welcome to sales," he said with a laugh. "At the end of the day, it's connecting people and trying to solve their problems."
This willingness to reach out directly stems from Kerrigan's understanding of the challenges MSP owners face. "I'm an MSP; you're an MSP. I was suffering—are you?" he would ask.
Cultural Alignment and Open-Mindedness
When evaluating potential acquisitions, ITS emphasizes cultural fit and alignment with its core values: having an open mind, being a creator, and doing the right thing.
"It's cliché, but it's also true that culture is so critical," Kerrigan stressed. "In the ones where it has gone exceptionally well, it's where there was true alignment of core values."
He acknowledges that selling a business can be fraught with emotional and identity challenges for owners. "One of the challenges is that there are hundreds of books written about how to successfully start a company, and there's almost nothing written about how to successfully exit a company," he observed.
Kerrigan believes sellers who have thoughtfully considered their post-sale aspirations are more likely to thrive within ITS. "I find that the people that have done that sort of work, that have been thoughtful about what they want... those are the people who really thrive after the fact," he said.
Empathy in Due Diligence
Kerrigan draws upon his own experience to empathize with sellers navigating the challenging diligence experience.
"The feedback I regularly get from sellers is that it is the most difficult professional experience of their career," he said. "It's a very vulnerable thing. It's a very revealing thing."
Understanding the emotional toll this process can take, Kerrigan makes a concerted effort to provide support. During a recent acquisition, he visited the sellers midway through due diligence—a move that surprised even their advisors.
"Their advisor was actually very worried about this and thought it meant trouble. But truly, the intention of my visit was simply social," Kerrigan said. "We just went to sushi... I let them vent, and I kind of let them hear. In my view, that's the kind of thing that strengthens a relationship right during that courting process."
Integration: A Thoughtful and Comprehensive Process
Post-acquisition, ITS embarks on a thorough integration process that typically spans nine to 12 months. Unlike MSPs that opt for minimal integration, ITS believes in fully integrating the acquired company to alleviate burdens on the owner and create opportunities for staff advancement.
"Full integration makes a lot more sense because it does alleviate burdens of the owner, it strengthens the entity and also creates an opportunity for the staff to move into other things," Kerrigan said. "It's safe to say they want to take some of those hats off. They want to pursue their passions; they want to advance their career, and coming into a bigger group allows them to do that."
ITS has developed an 18-phase, nearly 400-step integration process designed to methodically guide both the acquired company and its employees through the transition. A dedicated integration team, handpicked by Kerrigan, plays a crucial role.
"Every person on that team has come through their own integration," he noted. "When we meet the team for the first time, I want my team to share their stories and empathize with the people who are in shock."
According to Kerrigan, this approach not only eases employees' anxiety but also fosters a sense of community and shared experience. "You can almost literally see and feel the emotion decompress out of the room because they're thinking, 'Oh, these people went through it. They survived. That means I can too,'" he said.
Maintaining Trust and Credibility
Integrity is a cornerstone of ITS's M&A strategy. Kerrigan points to industry practices like “retrading” that can undermine trust. This is the practice of buyers lowering their offer price late in the due diligence process.
"Retrading is when the Letter of Intent says you're going to receive X amount, but then when you get a week from close, they retrade you at a lower amount," he explained. "We have retraded exactly zero of our LOIs."
Leveraging Cybersecurity Expertise
In an era where cybersecurity threats are increasingly sophisticated, ITS recognizes the importance of robust security measures. The company operates its own security operations center (SOC), staffed exclusively by ITS personnel to provide 24/7 coverage.
"We have services like compliance, penetration testing, vCISO services... just the whole gamut of keeping you protected," Kerrigan said.
ITS's Role in Shaping the MSP Industry
By valuing cultural fit, maintaining open communication, and supporting both owners and employees through the transition, ITS not only achieves business growth but also fosters lasting relationships, according to Kerrigan.
As the MSP sector continues to evolve, with increasing competition and technological advancements, ITS's strategy demonstrates that prioritizing people can lead to sustainable success. With its robust integration processes, commitment to integrity, and focus on cybersecurity, ITS is well-positioned to remain a key player in the MSP industry.
"We're carving out a space in a very, very crowded MSP market," Kerrigan said. "And we believe that our approach—emphasizing empathy, integration, and innovation—is the way forward."
