Channel Strategies for the CIOSo, what should you focus on if you’re thinking of buying or selling an IT services business? Here are three recommendations from experts.
1: Get your financial house in order. If you are thinking about selling, you better have a good handle on your balance sheet — from both a short- and long-term perspective. “We always tell people that it is a good time to be a seller when you have a very good view into your near-term future,” said M&A adviser Martin Wolf.
Logicalis’ CFO Greg Baker said one of the most important financial indicators is recurring revenue streams. That data provides insight into the health of the organization’s customer relationships and cross-selling opportunities and into whether its business processes are efficient.
It might take a couple of years to make sure an IT solution provider’s balance sheet demonstrates the company’s true business value, said Heartland Technology Solutions CEO Arlin Sorenson. “We buy assets and people. We don’t buy baggage,” he said.
2: Hire a good adviser who can help your team be objective. Whether it’s an attorney, banker or certified public accountant, make sure you have an independent adviser involved in M&A discussions if you want to get the best deal value -- whether you are a buyer or a seller.
“From both sides, one of the key things you have to have is a strong team of advisers, partners, folks that
Requires Membership to View
To gain access to this and all member only content, please provide the following information:
By submitting your registration information to SearchITChannel.com you agree to receive email communications from the TechTarget network of sites, and/or third party content providers that have relationships with TechTarget, based on your topic interests and activity, including updates on new content, event notifications, new site launches and market research surveys. Please verify all information and selections above. You may unsubscribe at any time from one or more of the services you have selected by editing your profile, unsubscribing via email or by contacting us here
- Your use of SearchITChannel.com is governed by our Terms of Use
- We designed our Privacy Policy to provide you with important disclosures about how we collect and use your registration and other information. We encourage you to read the Privacy Policy, and to use it to help make informed decisions.
- If you reside outside of the United States, by submitting this registration information you consent to having your personal data transferred to and processed in the United States.
can give you quality control,” said Sorenson.
Inevitably, there will be at least one “gotcha” sometime during the negotiations that requires the attention of an independent adviser, he noted.
3: Don’t forget culture. “From the buy side, the hardest thing for any merger is culture. At the end of the day, what will make or break a deal is culture,” Sorenson said. “It is harder than you think to integrate companies, and you need to take more time than you’d think. … Planning is a key element to this.”
Logicalis’ Baker also noted that far too many deals fall apart because the integration plan failed to account for the best ways to communicate merger vision to employees — and to help them realize that vision. “That is the piece that is most critical but people often don’t spend time on that,” he said.
About the expert
Heather Clancy is an award-winning business journalist in the New York area with more than
20 years experience. Her articles have appeared in Entrepreneur, Fortune Small Business, the
International Herald Tribune and The New York Times. Clancy was previously editor at
Computer Reseller News, a B2B trade publication covering news and trends about the high-tech
channel.
Let us know what you think about the story; email Barbara Darrow, Senior News Director at bdarrow@techtarget.com, or follow us on twitter.