Managed services can deliver higher reseller valuations


Managed services can deliver higher reseller valuations

Simon Quicke

Resellers have been encouraged to consider the positive impact on their value being involved with services can have raising the potential to be gained when the 'for sale' signs go up.

The drive towards managed services provides many in the traditional channel with the opportunity to develop not only an additional more predictable stream of business but also the chance to position themselves as a specialist in that arena.

Those resellers that have been sharing their experiences of being involved with the managed services market in recent Kaseya events have talked of the different valuations that services operations have been given compared to box-shifting and break-fixing alternatives.

Colin Sales, founder and managing director of Montal, who has had experience selling and buying resellers said that developing managed services and writing software scripts to make processes work more efficiently changed the status of a reseller and added value to its worth.

"Valuations are usually a multiple of the profit and can be five or six times but for software companies it can be ten times because a lot of software companies have customers that are committed to them," he said.

He added that moving into managed services made a reseller much more attractive in the long-term and it had developed its own intellectual property writing scripts that automated some of the managed services processes.

Paul Tomlinson, managing director at Mirus IT, also talked about the positive impact on company valuation that a move towards managed services delivered pointing out that predictable recurring revenue with a combination of services and some home grown intellectual property was much more attractive than the traditional break-fix model.

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