MSPmentor

I’ve been mulling this blog for a few days. Across the managed services market, entrepreneurs are selling their companies or participating in M&A (merger and acquisition) deals. Some of those entrepreneurs stick around for the long haul. Other entrepreneurs exit when the deal is announced or shortly thereafter. The big question for those entrepreneurs who stick around: Can they be good long-term employees — especially when they can’t call all the shots within a larger parent organization?

I must admit: I weighed some of the questions above when Amy Katz and I decided to sell Nine Lives Media (MSPmentor’s parent) and its brands to Penton Media. Amy and I co-founded Nine Lives. We were 50-50 partners. And we managed to recruit a dozen fantastic contributors and freelancers as we grew the business.

So was I nervous about joining a “big” media company like Penton, which has 1,300 employees?

Not really. Fact is, Amy and I previously worked full-time at big IT media companies. We enjoyed our time at those organizations. But we launched Nine Lives Media together in 2008 because we saw clear inflection points in the market: Traditional media companies were straining to transition from print to online. And most of the online sites were basic newswire services — no real analysis. We knew (reality check: we hoped) we could move faster on our own. And we did.

But now, we’ve joined a big company. As of August 29, Penton Media owns Nine Lives. Much like those MSP entrepreneurs who sell their businesses to bigger players, we must adjust to our larger corporate surroundings, and we must soak up all the knowledge that Penton has to share.

Can You Make the Transition?

But how do you know if your entrepreneurial DNA can continue to thrive within a larger organization? Here are three questions MSP entrepreneurs should ask before ultimately joining a larger company:

1. Do you see eye-to-eye with the larger company’s mission?

• The Big Buyer: In a message to readers and sponsors, Penton CEO Sharon Rowlands stated, “We [Penton] are the heart of our markets. At Penton, we are all about providing relevant information and connections.”
• The Small Seller: Nine Lives drives community engagement across its IT Channel websites.
• Takeaway for MSPs: Our missions certainly sound similar. If your missions don’t align then don’t do the deal.

2. Can you offload distractions and learn something new — every day — after the deal is done?

• The Big Buyer: Penton has seasoned management teams across multiple business functions — sales, marketing, search engine optimization, corporate IT, finance, HR, etc.
• The Small Seller: As Nine Lives’ CEO, Amy was managing all of the invoicing, finances, accounting, ad rotations — a ton of stuff in addition to her primary role: Driving business development and revenues. Somewhat similarly, I was tied up with search engine optimization, coding fixes and IT support in addition to my main role: Driving community engagement and content.
• Takeaway for MSPs: Make sure the resulting deal frees you up to focus on your greatest strengths. In our case, we are leveraging Penton Media talent and infrastructure that has already made our lives substantially easier. If you’re selling your business to a company that can’t free you up to do more great work… then you’re not going to survive in the new organization.

3. Can you actually enjoy the fact that you’re not the smartest person in the room?

• The Big Buyer: Like I said in point 2, Penton has a deep bench of talent across sales, marketing, SEO, corporate, IT, etc.
• The Small Seller: I’m a pretty confident guy — borderline arrogant in some situations. I’ve got strong opinions about IT, media, managed services… and the list goes on. But I love my job because I constantly hang out with people who are smarter than me. I attend dozens of MSP-centric events annually because I gain access to CEOs who build companies beyond my imagination.
• Takeaway for MSPs: If you always need to be the smartest person in the room (or if you believe you’re the smartest person in the room), then perhaps joining a larger company isn’t the right path for you.

Bottom Line: Why Are You Selling?

As an entrepreneur, you must also ask yourself “why am I selling?” before signing on the dotted line. Make sure “money” is not the dominant answer.

Let me give you an example of a properly motivated MSP. During the TruMethods Schnizzfest conference earlier this year, I spent a couple of hours speaking with an MSP who had recently sold his business. But he stayed on as a top executive at the acquiring company. This particular executive made about $1 million from the sale. The only “luxury” item the executive has purchased since that time is an upscale watch. The executive is still driving the same car and still living in the same house that he had pre-M&A.

I asked the entrepreneur, “what did you ultimately gain from the deal?”

The entrepreneur paused, smiled and answered softly: “Peace of mind.”

Indeed, most of the entrepreneur’s net worth was tied up in his company. One bad break — failing health or a bad business move — could have destroyed his life’s work. By selling his company but staying on after the deal, the entrepreneur reduced some of his own financial risk and discovered a whole new set of opportunities for growth. But he was also the type of entrepreneur who could adapt to working for a larger company.

I will never forget that conversation. And I hope I transition just as smoothly into my new role… as an employee…

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