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For owners of Microsoft practices, a successful exit strategy can make all the difference when it’s time to sell.
A well-thought exit plan has flexibility, allowing the owner(s) to make timeline adjustments based on market indicators, performance, demand, unknowns, etc. Even with pre-determined flexibility, owners are still left with one million dollar question: When is the right time to sell my Microsoft practice?
Consider these factors when making your decision.
Market Conditions
2024 is a seller’s market. While Microsoft's businesses have been able to maintain high levels of demand from buyers throughout the years, 2024 is seeing increased demand from buyers after a lull in 2023. Basic economics tells us that when demand rises valuations follow suit.
This demand is generated by buyers seeking talent acquisition, consolidation opportunities, technology integrations, customer acquisition, and more. With the release of Copilot, Microsoft partners who work towards being certified will see elevated interest as buyers look to acquire businesses and the certifications for Copilot. Consider the cost of a Copilot certification vs the increase it will have on your valuation today or in the future.
Continually ask yourself questions. What changes could be made next to the partnership designations? How long can your business focus on growth and adopting the new Microsoft designations/certifications? Could selling allow your customers to access more through a larger partner?
Financial & Operational
It’s vital to prioritize clear and concise bookkeeping. This allows you to display your company accurately to buyers. While buyers value recurring revenue and an evenly distributed customer base, accurate financial metrics will ensure the highest possible valuation.
Alongside financials, it’s best practice to have your process, business plan, sales cycle, etc. spelled out. Being able to speak to these topics is not the same as having defined practices inside your business. Buyers will see how your business can best align with their other investments. If your team doesn’t currently have defined processes, simply task them with defining the structures of the organization to seek out inefficiencies.
Operationally, you need to have a team or individual in place if you plan on exiting the business that you have been a major contributor to. Buyers value your knowledge and your ability to drive your company. Without you, will they still be able to keep the business on its projected path? If the answer is no, you need to internally segment your responsibilities. Ideally, your financial and operational health will line up with your timeline to sell.
Age
Your age but also your business age plays a role in exiting. If your Microsoft partnership is producing and you are adding more services, etc. you might think this wouldn’t be the best time to sell. Depending on the age of your Microsoft partnership you might be right. However, if you have an established partnership and you are growing -- you are at the most attractive state from a buyer’s perspective. A majority of buyers target companies with consistent growth vs flat revenue.
Outside of your business goals, your age is a factor. Remember that burnout is real, timing the market can prove costly, and exploring an exit doesn’t mean you’re done working. IT ExchangeNet provides you and your Microsoft practice with exit options. Maybe you envision yourself working under a Private equity-backed Microsoft roll-up, or you want to be a strategic acquisition for a larger expanding partner.
Conclusion
Selling your Microsoft business is a major life decision. Consider the factors above as you evaluate your exit strategy. IT ExchangeNet offers free consultations and it is never too early to start planning your ideal exit.
Talk to our team and further explore what exits look like for you and your business. We have completed 260+ IT transactions in 22 countries, and continue to work alongside Microsoft partners selling and buying.
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