Five Steps Every IT Services Business Should Take To Successfully Prepare For a Merger and Acquisition

Five Steps Every IT Services Business Should Take To Successfully Prepare For a Merger and Acquisition

Want to best prepare for a successful merger and acquisition (M&A) initiative, rather than completely flounder?

We thought so.

M&A is more about looking good to prospective buyers and/or sellers. There’s a lot to it.

To prepare for a successful M&A process, there’s a few things you need to know.

Do this for a successful merger and acquisition result

To best be prepared for a successful merger or acquisition, there are a few key principles you need to know and be prepared for.

Here are five we feel are the most relevant to getting what you want.

  • Double-digit annual growth. Your IT Services business needs to set goals to achieve double-digit annual growth. You’ll want the revenue growth to impact both gross revenue and profit.
  • A healthy balance sheet. A healthy balance sheet with strong retained earnings and minimal debt will make your firm more desirable to potential buyers.
  • Clearly differentiated service. You ideally want to have a service that’s offered to a specific audience, with a clear value statement, and positioned as number one or number two, in your industry or market. To craft this, we’d suggest going through a specialization and productization process, much like we offer.
  • Recurring revenue equaling 30% of total annual revenue. In order to make a potential buyer salivate with interest, you’ll need to show that your annual recurring revenue makes up at least thirty percent of total revenue.
  • New revenue stream. One of the things that will undoubtedly help you create a conversation of interest, is by developing a new stream of revenue. That might look like a new line of service you offer your clients, a breakthrough software expansion, or a new location that services a geographic location. Whatever it is, we’d suggest developing a strategic plan to build this, on an annual basis.

The devil’s in the details

There are tons of little details that go into planning an M&A initiative.

It’s not as simple as your broker may convince you it is.

Let us guide you through the process of a triumphant result, when you look to buy (or sell) you IT Services business.

Get to know us

Fill out the form on our contact us page and learn more about how we could potentially help your business with your M&A initiatives.