When do you sell?

Own Web Now & ExchangeDefender’s success has been relatively public so most of the conversations I have with the older/larger providers tends to be about the sale of business and next steps. Personally I see most of it being driven by the sunsetting of the “IT management” business model more than anything else but I’ll walk you through my case scenario just for fun.

When do you sell your business?

– When you’re offered far more than it’s worth

– When you’re offered far more than it’s future growth potential

– When you have financial problems*

– When you have a better growth opportunity within a larger company

– When you’re just done with business ownership*

Unfortunately, most of the M&A activity I’ve seen has been a result of necessity, not opportunity. Whether result of buying 100,000 seats of an RMM tool without a client base or a PSA tool that the business was ready for or some poor technology bets (“we’re going to be a Health Care IT provider because nobody likes to spend money recklessly quite like people who went to college for over a decade!”) I know of far more financial issue stories than cash out success stories. The second most popular thing is when you realize you’re not cut out for business ownership – if you’re pretending to be an industry expert and spend more time on the road while blaming your crumbling MSP on the service managers you keep on firing every month then you really might be better off in a mid-management role that doesn’t get to live and die on important decisions. None of these are particularly shameful in my opinion, business ownership is not easy and it’s definitely not fun all the time.

My opinion

The following pertains to my business so feel free to judge accordingly

Our business is profitable, with zero debt, no need to raise capital and has 0 external interference. Our business decisions are driven by us – not some venture capital firm that wants to cash out or folks that would rather do something more interesting.

We have a long term business plan and models. ExchangeDefender has a written 12, 24 and 5 year plan. Shockey Monkey has a more condensed multi-year plan. Our new Managed Messaging is taking off like a rocket and we expect it to make up a bulk of our revenues 2014 and beyond. We have relatively little room to act on whim.

We are a global company. If a hurricane blows through Orlando tomorrow and levels it, we’ll be fine. If our entire data center in Dallas blows up tomorrow, we’ll be fine. If Europe completely implodes financially we should be able to get by. We’re not catastrophically affected by regional issues.

Those are just some operational facts. I have always ran the business in a relatively conservative way – if we couldn’t afford to do certain things, we didn’t and if we couldn’t estimate the risk we couldn’t manage it so we missed some opportunities. The result is a significantly smaller business (than the hypothetical one) but it’s still a business as opposed to a pile of IT roadkill on the side.

I like to think we’re different from the norm but we’re also not alone in this, I know many businesses that are structured this way. Here are my reasons not to sell.

Why not sell?

I have enough money. The financial reward would not be as meaningful. I don’t need a bigger house (I do need a warehouse for the cars) or more toys (which I am reminded of daily by my wife and the kids) or boneless buffalo wings. It would be hard to come up with a sum that would get me to sign the line which is dotted.

I already have a plan. I don’t need external strategic management, having built this company for the past 15 years I (shamelessly, arrogantly) don’t find too many people that understand the market, solutions and the needs much better than I do. So parting with control of what we do here would have to come with a extra large side of blue ocean.

I am excited about what we’re doing. Call me crazy but I love what we’re doing. We’re growing our partners. We are growing our business. Across the number of business lines we have no competition. Can you get a free PSA anywhere? Nope. Can you find a hosted Exchange provider that will do all the work for you? Nope. Can you find the same pricing with the level of support we provide? Nope. Can you build what we’ve got and gain a huge economic advantage? Nope. Keep in mind that this only covers the aspects of the business that you see in public. The stuff that we’re working on in the lab is far more impressive. I am way ahead of my competitors in every major area and I no longer even look at it as a race, it’s more that we can do more stuff now than we could in the past and that is incredibly fulfilling.

We get to do something good. This is kind of corny but the work we do here matters to a lot of people. We get to impact people on security, privacy, give them an opportunity to do something great. We’re able to help people become MSPs without mortgaging stuff and that provides not just a loyal partner for us but also a possibility that they take all that PSA/RMM money and invest it in themselves to build another unique solution that otherwise would not have existed. While nobody handed stuff to me, I wouldn’t be where I’m at without the opportunity I got with so many partners – and being able to repay that is kind of at the core of who we are and what we do.

Should you sell?

I don’t have an answer to that one.

But go through the same checklist that I’ve gone through and figure it out.

I have spent a week at Autotask Live and TechEd and talked to tons of partners about what they are seeing and the questions they had – so I will cover it over the next few weeks on Vladville and on LooksCloudy.com so hopefully it helps some of you understand what is going on out there. Honestly, I am pretty optimistic about what is going on just based on our bottom line and partner activity. The low hanging fruit and the weakest players are out already or are on their deathbed, so it’s up from here in my opinion. ABP.