From MSP Founder to M&A Leader
Neil Medwed shares his remarkable journey from founding Preferred Technology Solutions in 1994 to becoming VP of Corporate Development and M&A at Meriplex. Starting in the computer industry in 1983 with the original IBM PC, Neil built his MSP over 26.5 years before selling to Meriplex. What began as a networking role evolved into leading 11 acquisitions over four years. His transition illustrates a common MSP lifecycle: moving from empire-building to lifestyle business, then recognizing the limitations of staying small in competitive markets. Neil candidly discusses how joining a larger platform allowed him to support enterprise clients he couldn't serve independently, while gaining access to deeper talent pools and nationwide capabilities that weren't possible as a standalone MSP.
What Acquirers Look For in Target Companies
Meriplex and similar platform companies prioritize acquiring successful, growing MSPs with strong revenues, profitability, and talented teams. Neil distinguishes this approach from acquirers who target struggling companies to turn around at lower multiples. For Meriplex, ideal targets generate $10 million or more in revenue, demonstrate consistent growth, and have leadership that wants to achieve something bigger than they could independently. Geography matters, but Neil also evaluates core solutions and vertical specializations that could scale across Meriplex's nationwide footprint. The emphasis is on companies with solid fundamentals that can be enhanced through integration, not fixer-uppers requiring extensive restructuring. Cultural alignment around performance-based management and data-driven decision-making is equally critical to financial metrics.
Common Mistakes MSPs Make Preparing for Sale
Neil identifies several critical errors MSPs make when approaching M&A. First, many lack clean, well-organized financials and don't manage by data, leading to overstaffing that depresses profitability. He estimates many MSPs carry 15-20% more employees than necessary, directly impacting multiples. Second, MSPs often fail to establish exit strategies from day one, leaving them unprepared when opportunities arise. Third, they don't formalize sales processes, hold underperforming salespeople accountable, or properly leverage vendor partnerships. Fourth, owner-dependent businesses where all decisions flow through the founder significantly reduce value. Neil emphasizes the importance of empowering titled leaders to make decisions, investing in peer groups and community for knowledge sharing, and understanding that what got you to one level won't necessarily get you to the next. Tool consolidation, particularly around platforms like Kaseya 365, can dramatically reduce per-seat costs and improve margins before a sale.
Ensuring Cultural Fit and Employee Success
When evaluating potential acquirers, Neil advises MSP owners to prioritize what's best for customers and employees before considering financial terms. Understanding the acquirer's 10,000-foot strategy is essential: Are they buying for immediate multiple arbitrage, or building a lasting platform? Private equity backing versus self-funding creates different dynamics and timelines. Neil emphasizes investigating the executive team's track record and understanding that talent requirements change as companies scale. Cultural fit means more than workplace atmosphere—it's about embracing a "culture of success" with performance-based management, formalized processes, and data-driven accountability. For employees, joining a larger platform eliminates glass ceilings, offering upward mobility into management roles and geographic flexibility across a nationwide organization. The transition from being the sole decision-maker to collaborative decision-making within a larger village requires adjustment, but brings access to specialized expertise across finance, operations, and sales that small MSPs can't maintain independently.
