MSP Corp Investments Inc. has raised $35 million in growth capital to acquire and/or invest in managed IT services providers (MSPs) across Canada. Key financial backers include BDC Capital’s Growth Equity Partners - Fund II and CIBC.
The strategy: MSP Corp says it "acquires and partners with high-performing MSPs in Canada to deliver resources, technology, and business support to empower exceptional MSP teams, and provides successful exits for business owners."
More than a financial backer, MSP Corp also "delivers the tools and technology to allow MSPs to make key decisions and service their clients in the most efficient way possible while allowing the owners to de-risk themselves and realize the long-term value they have built," the company says. Key areas of focus include cybersecurity, cloud hosting, managed network services, mobility management, and more.
MSP Corp's investment strategy has "multiple models and payment options for MSP owners seeking to retire, cash-out a portion of their business, or simply diversify future risk, and compelling compensation structures to provide short-term and long-term incentives for owners," the company says.
MSP Corp Acquisition and Investment Strategy: The ChannelE2E Interview
In an email interview, ChannelE2E gained more details from:
- Jason Dacosta, co-founder and president of MSP Corp.
- Ravi Ramharak, co-founder and managing director of mergers and acquisitions at MSP Corp.
Both executives are quite familiar with the MSP and IT services markets. Dacosta previously held key posts at Novacap (which focuses on technology, media and telecommunication investments) and Oxio (an Internet connectivity platform and operating system). Ramharak previously was CIO of Mtek Digital, an MSP.
ChannelE2E: Has MSP Corp made any investments yet?
Dacosta: MSP Corp has made eight acquisitions to date in Canada and is currently searching for more as we continue expansion through acquisition. We have made acquisitions in the Ontario/Saskatchewan and Alberta regions. We are currently actively looking in British Columbia/Manitoba/Atlantic Canada and Southern Ontario.
ChannelE2E: Is MSP Corp targeting a specific size of MSP (headcount, annual revenue, EBITDA, etc.) for investment?
Dacosta: MSP Corp is open to companies with more than 10 employees and minimum annualized revenue of at least $2.5 million and EBITDA above $395,000.
ChannelE2E: What tools & technologies will MSP Corp provide to the portfolio companies?
Ramharak: As of today, MSP Corp is working with companies such as Pax8, Threatlocker, ESET and SentinelOne to create Master MSP programs for its sub cos. This is an evolving topic, and we plan to have and offer more services to our portfolio companies in 2022. We will be offering many tools and services including centralized insurance/vendor management and employee training. We listen to our portfolio partners needs and we work to provide those services to help them.
ChannelE2E: Will the MSPs in the investment portfolio tuck into one or more platform MSPs?
Ramharak: MSP Corp believes in autonomy in operations as such we do not by default roll companies into platforms unless this is a request of a retiring owner. We believe this decision is best left in our operators’ hands.
MSP Corp's Financial Backers
Executives from BDC Capital’s Growth Equity Partners - Fund II and CIBC also weighed in on MSP Corp.'s strategy.
In a prepared statement, Michael Notto, partner at Growth Equity at BDC Capital, said:
“We are excited to partner with Jason, Ravi, and the entire MSP Corp team. We have been thoroughly impressed by the organization, its accomplishments to date and the incredible growth the business has been able to achieve since its inception. We look forward to supporting MSP Corp as the company continues on its rapid expansion trajectory, both organically and through continued acquisitions, to reinforce its position as a premier brand in Canadian IT managed services."
Added Raymond Kam, senior manager of Commercial Banking at CIBC:
“CIBC has been the company’s trusted partner since its humble start in 2020 and we value the relationship with Jason, Ravi, and the rest of the team at MSP Corp. Our team is consistently impressed by the company’s ability to execute its core strategies, and we are confident that the management team can continue taking MSP Corp to new heights. MSP Corp represents a great entrepreneurial story, and we look forward to continue supporting MSP Corp going forward.”
BDC Capital is the investment arm of BDC, which positions itself as the bank for Canadian entrepreneurs. CIBC is a North American financial institution with 10 million personal banking, business, public sector and institutional clients.
