Despite what the economy may be doing or not doing, the private equity community is pulling out all the stops when it comes to trying to identify quality MSPs. I have personally witnessed a big increase in inbound calls and emails from investment bankers looking to invest in the right MSPs. If what I’m hearing from the MSPs is accurate, MSP executives are fielding a lot of inbound traffic as well. What does this mean?
As I have been saying, the private equity banks are looking for ways to invest their money and managed services right now seems to be the big game in town. It will be curious to see if any MSPs actually get funded. Only time will tell.
I’ll keep you posted on any new developments but don’t expect this trend to go away anytime soon.
The question I have is how much do these investors really know about the industry and do they make good business partners. Case in point.
Years ago, when venture capital flowed more freely than it does today, investment bank and private equity investors almost always insisted on being part of the management team of the MSPs they staked. Having spoken to many MSP executives who were part of those companies, I can’t say that there are many successful examples of venture lead MSPs.
But, that could all be changing. Today’s investors seem more than willing to not only take minority ownership in the companies but also to leave the existing management team in place (provided they are doing a good job). I would say this change in investment style is a sign of maturity in the private equity/VC community.
Until banks start lending again, I say bring on the private equity money and let’s grow this industry!