What Every MSP Should Know Before Selling

I sit down with Dan Brumwell Partner in Weaver’s Transaction Advisory Group to discuss Financial Due Diligence, a key component of the due diligence process.

Below are the questions discussed, along with a high level summary of the answer. Enjoy!

1. Weaver Background

2. Quality of Earnings (QoE): The Basics

Q: What is a QoE and why is it important?
Q: What are core components of a QoE?
Q: How is revenue broken down (monthly vs. annual)?
Q: What if data isn’t easily available?
Q: Can QoE show profitability per customer?

3. Audited Financials vs. QoE

Q: How is a QoE different from audited financials?

4. Common Adjustments in MSP QoEs

Q: What adjustments do you typically make?

5. Key Metrics and Red Flags

Q: What financial red flags do you often find?
Q: How do you handle churn metrics?

6. Net Working Capital (NWC) Essentials

Q: What is NWC and why is it important?
Q: How is NWC calculated?
Q: Common seller misunderstandings?

7. Process & Client Communication

Q: What does a typical engagement look like?
Q: Who participates in diligence calls?
Q: What if info is hard to get?
Q: How do you handle tight deadlines?

8. Seller-Side QoE: Why It Matters

Q: Why should a seller do a QoE report?
Q: When should MSPs do this?

9. Market Trends & Future of Diligence

Q: What trends are you seeing?
Q: Will QoE become fully automated?

10. Final Tips

Q: What’s your advice for MSPs thinking of selling?

🎧 Tune in now to learn how to own your financial due diligence process.