MSP acquisition private equity: what you only realise once you are inside
AuthorMSP Late NightPublished on:An MSP acquisition by private equity nearly always starts the same way: a good conversation, a handsome bid, a presentation in which “decentralised entrepreneurship” and “we keep your logo” sit side by side. Six months later you are standing at the coffee machine hearing yourself explain why reports now have to be done differently. Nobody lied. Only: the things you did not ask beforehand are now your daily work. And the things you did ask got answers that were technically correct but turned out to mean something else in practice.
Most MSP owners in the Netherlands have been approached at some point. Every buy-and-build outfit of any size has your address. And if your company sits between 20 and 80 FTE, with a decent mid-market portfolio and recurring revenue, you are in the profile on at least five longlists.
The odd thing is: most owners we speak to have never asked themselves the first question. Not “what is my company worth”, but “what do I want to happen to this company in three years, and to me?” With a private equity firm on a three to five year investment horizon, your exit scenario is already scheduled before you sign. With a family office it is different again. With a buy-and-build where forty directors became one in a short space of time, different again. That turnover is not seen as a problem there, it is part of how the model works. For you as a departing founder it is a problem, if you did not know it when you signed.
What an MSP acquisition by private equity really asks of you
What works in practice is not “bringing in a good adviser”. Everyone does that. What works is having three things clear for yourself before the first introductory conversation. One: what is your horizon, are you selling to step out, to accelerate, or to secure your pension. Two: on which axes are you willing to be controlled and on which absolutely not. Three: where is your natural ceiling if you carry on alone.
That third question is the heaviest. Many MSP owners have been sitting for two years at the same revenue level and call that a plateau. It is not a plateau, it is their own range. At that moment there is a real conversation to be had with an investor about acceleration. If you are at a peak and think it is a plateau, the deal buys you exactly the wrong acceleration: your engine goes to maximum revs just as the market turns.
The three types of buyer who all call themselves buy-and-build
In the Netherlands there are roughly ten serious parties buying up MSPs. They all present themselves with the same four words: platform, growth, synergy, entrepreneurship. Practice differs fundamentally. There are buyers who deliberately keep the name and identity, where after three years the founder is still on their own business card and serves their clients locally under the old brand. There are buyers who after an integration process of about a hundred days bring everything under one label, one ERP, one sales method. And there is the classic private equity flip: three to five years of polishing, then selling on to the next layer. All three can work out well. For different owners.
“As an owner you have to think hard about what you are stepping into”
Where it goes wrong: owners look at the bid and not at the model behind it. The bid from a strategic platform and the bid from a pure private equity flip can be nearly identical on paper: 6x EBITDA, partly cash, partly earn-out, partly rollover. But what happens after the signature is completely different. With the platform your company becomes a main site with its own P&L and you keep influence over client contracts. With the flip you become a cost centre reporting every month to a CFO you did not choose, who measures different KPIs from the ones you ever found relevant.
“Private equity brings acceleration to what you have already built”
What you only notice after the signature
The pattern we saw at four different former owners this past year: the earn-out is not the problem, the playbook is the problem. An MSP is usually built as a pyramid with one owner at the top who does everything themselves, and a layer of consultants underneath. In a larger group that has to invert: more sellers, fewer heroes, everyone working to a documented process. That is a fundamentally different way of working. Owners who are not prepared for it start widening the pitch as soon as they are not scoring, precisely what you do not want in a well-oiled sales machine. The freedom you sold is not the freedom of time, it is the freedom to change the playing field yourself.
What else gets underestimated: more happens at the coffee machine than you think. Staff who stay hear the stories: the owner left with a serious sum, new reporting is coming, insurance is being aligned, the HR cycle is changing. If you do not actively manage those hundred days, within six months you have lost the people you most wanted to keep. At one client we saw 18% turnover in middle management in the first year after acquisition, all of them people who left not over salary but over “it does not feel like it used to”. That costs your earn-out more than any integration line.
The underrated role of your own diary after day one
Something else almost nobody prepares well: what do you do in the first six months after the deal. On paper you are still the director, in practice there is suddenly an investment manager between you and your decisions. Every expense above a certain amount, often alarmingly low, think 25,000 euros, needs approval. Every hire has to fit a group-wide workforce plan. The marketing campaign you used to decide in two days now goes past three people. You are no longer an owner, you are a general manager with a profit target. That can be perfectly fine, if you know it. Owners who did not realise sabotaged their own earn-out after nine months through frustration: rows in the management meeting, saying no to group standards, and eventually leaving with a fraction of what was on paper. Those who do realise use those hundred days to organise influence in the places that really matter: which client segments you keep, which people get key positions, and which reporting rhythms you set up yourself before somebody else does it for you.
An MSP acquisition by private equity is not an exit and not a finish line, it is a trade of freedoms. You trade the freedom to decide what you do for the freedom to build something bigger than you alone. Anyone who makes that trade deliberately and chooses the right buyer for it looks back three years later on a good move. Anyone who only sees the trade on day 101 will sit out the earn-out instead of getting what is in it. At MSP Late Night there is a group of MSP leaders who have already walked this route. Joining the next conversation will help you choose more sharply than any adviser report.