What Happened To The Value of My MSP Practice?

If you read one blog this week that prompts you to actually do something meaningful in your MSP practice, please make it this one. I have seen a lot of MSPs brag over the years about how well they are doing, how much money they bring in, and how cool their NOC is. This behavior stands in stark contrast to how they act when it comes time to either sell or value their company. 

It's almost a night and day comparison to how companies behave under normal times and then go into panic mode when they find out their business isn't worth as much as they thought. "If only I could go back a few years and make some changes, my business would be worth more!", they say. Well, pay attention and grab a pen because I'm going to give you some very simple pointers for making your MSP practice more valuable.  

1. Contracts are King: if it doesn't appear in a service contract, it doesn't exist. No, seriously. Revenues not tied to a SLA are simply not worth as much during a valuation so make sure you get as much as you can in those SLAs. 
2. Assignable SLAs. If you don't know whether your service contracts are assignable, go get a lawyer and have those SLAs changed immediately. 
3. Keep good books. Tidying up your financial records the night before a M&A or valuation transaction is like studying for an exam without ever having read the course material. It's too late! Don't get caught unprepared; start keeping your financial books now. Hire an accountant if you don't have one but get it done. It will save you lot of trouble later on. 
4. Profit, Profits, Profits. Running a lifestyle business and minimizing taxes are all well and good but if you want to have a highly valued MSP practice, start paying attention to your bottom line. MSPs with little to no profits at the end of the year will simply not command attention. A healthy bottom line will do wonders for your MSP's valuation.

These are only a few of the ways you can start to add value to your MSP business. Even if you don't plan to sell your company anytime soon, doing these simple things will have a positive impact on your business.