Now, I’ve spoken about private equity entering the MSP space before, but since then, a lot has happened, much of which is good news for MSPs. Think about it this way: PE firms only chase expanding addressable markets. The fact PE firms have been investing in the channel means they believe the potential customer bases for MSPs and vendors are growing rapidly. While PE firms investing in the channel is overall a good thing, there are some things for MSPs to consider this year.
Where are we at today?
For the past for few years, PE firms have been making plays at MSPs and software vendors. Just think about the M&A activity we’ve seen: Silver Lake and Thoma Bravo acquired SolarWinds; Vista Equity Partners bought Datto, AutoTask and LogicMonitor; Thoma Bravo purchased Continuum and Barracuda Networks; Insight Partners owns Kaseya. Kaseya acquired IT Glue, Unitrends and others; and Continuum bought BrightGauge. (The list goes on and on.)
By the looks of it, PE firms aren’t done with investing in the channel — even though some experts have expressed concerns over how long the increased activity from PE firms will last. Regarding PE, while a lot has happened over the past few years, there are still MSPs and software vendors up for grabs in the market. (I’m sure you know the players I have in mind.) Outside of the channel but still pertaining to technology, PE firms are continuing to go after enterprise software vendors. While the interest in tech players in growing addressable markets is real, MSPs have some choices to make.
Solutions for MSPs are getting better — but there’s a catch
Without a doubt, in general, due to PE money, solutions for MSPs are getting better — nobody can deny that. Today, the MSP toolstack is better than it’s ever been before, but it’s also larger, more complex and a much bigger component of your cost per seat (I’ll address this topic in an upcoming webinar, so be on the lookout for it). As solutions become increasingly complex, it’s important for MSPs of all sizes to pay close attention to what the major vendors are doing in the MSP landscape.
Follow the market’s leaders
Take a close look at the toolstacks from each of the major vendors in the channel and assess what they’re building or buying. Then, consider this: What are the advantages or disadvantages to aligning with one vendor? Is there better pricing, support, integrations, communities? How do you balance it all? Let me stress this: I’m not suggesting it’s time for MSPs to pick sides (it’s a little early for that).
What I am saying is MSPs need to stay aware of the changing market and potential implications of growing PE money in the market over time. As you consider new tools and services, factor in the landscape. The bottom line is the market conditions have created an environment where it’s easier to be an average or below average performing MSP, so this is where top-performing MSPs can thrive.
Never has getting to the top of the MSP value stack been more important. The good news is the following: I believe maturing markets always create opportunities for those who understand the changing factors. It’s our job as an industry to stick together by staying on top of the market conditions and position ourselves to leverage the changes to our benefit.