MSPmentor

For the first time in a long time, I suspect the entire Nine Lives Media Inc. team plans to unplug for a 3-day weekend. Of course, we’ll be back online if there’s any breaking news. In the meantime, here are seven managed services blog entries MSPmentor’s team didn’t have a chance to write for the week ending Sept. 3, 2010.

7. They Do Hosted, Too: Read recent press releases from N-able, and you’ll notice that the managed services software provider is starting to more aggressively emphasize its hosted offering. Smart move, especially when it comes to search engine optimization.

6. Worth Noting: Got a call from Own Web Now CEO Vlad Mazek earlier this week. He said the company’s free Shockey Monkey system (a PSA offering of sorts…) attracted 4,392 users in 14 countries within two weeks of launch. A few skeptics have emailed MSPmentor, saying OWN has been making Shockey Monkey promises since around 2007. I don’t want to get caught in the debate. Vlad seems serious about making Shockey Monkey a success…

5. Catchy Subject Line: I received an email this week with the subject line “What’s Your Plan B?” I was intrigued. Had I just gone bankrupt? Had a business interest of mine just imploded? Nope. It was a marketing teaser, inviting readers to learn more about master IT, a managed services provider that continues to catch my attention with seminars and educational sessions targeting end-customers.

4. Motivating Factor: Why did HP pay $2.3 billion to acquire 3Par? A few readers all are sharing the same answer: HP is desperate to counter vBlock, the data center alliance of Cisco, EMC and VMware. I hope to write some more about that theory in a few days.

3. VMware, Act 2: Plenty of MSPmentor readers attended this week’s VMworld conference in San Francisco. EMC’s CTO described how VMWare will benefit service providers. But it seems like MSPs were looking for more partner-centric information. Don’t forget: VMware’s core partner conference — VMware Partner Exchange — arrives in February 2011.

2. MSP Valuations: It might be time for me to eat some crow. Maybe even a lot of crow. About a year ago, I told readers that I suspect MSPs are worth roughly 1.5 to 2 times their annual recurring revenues. But in recent weeks several sources have told me that I’m far too optimistic and way off base.

A few of those sources (sellers and buyers) have been involved in MSP M&A activity. All asked to go off the record. And every one of them said really small MSPs and IT service providers are valued at about 1.0 times recurring revenues … and often, less.

Certainly, big MSPs that make good on their cloud claims can fetch higher selling prices. But it sounds like most of the small M&A deals we’re all reading about typically involve sub-1X revenue valuations… …

Or am I wrong (yet again)?

1. Traffic Jams Welcome: MSPmentor’s August 2010 traffic rose 63% vs. August 2009. We appreciate the page views and your visits. But most of all, we appreciate the fact that so many readers stop by to share their opinions about the managed services industry.

That’s all for now. But check back. M&A activity has been known to happen over holiday weekends…

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