EP237 - M&A Mastery – Part 1 – The Foundations with Ken Roulston & Ian Luckett

To help guide us through it all, I’m joined by someone who’s been there, done it, and got the multiple to prove it, the brilliant Ken Roulston.  Now, if you haven’t come across Ken before, he’s a bit of a legend in the IT channel. He started his MSP from scratch in 2009 and grew it through six strategic acquisitions before selling it in 2023. What I love about Ken is he doesn’t just talk about theory, he’s lived the journey – from finding the right businesses to buy, navigating the risks, right through to a successful exit. And in this first episode, we’re going right back to the beginning and laying the foundations for M&A success.  Ken shares openly about how he got started, including the bold decision to buy his first MSP right in the middle of the 2009 financial crisis. He explains why he chose acquisition over building from the ground up, how he structured the deal, and the mindset he used to keep pushing forward. For anyone who thinks M&A is only for massive corporates or private equity firms, Ken’s story is a real eye-opener.  We explore the idea that, like it or not, every MSP will exit one day. Whether it’s a full sale, a team takeover or an acquisition, at some point you’ll need a plan. Ken talks about the importance of working backwards from your personal goals, being clear on what you want, and starting early to put your business in the right shape. This episode is full of reminders that waiting too long or not preparing properly can seriously limit your options, and your valuation.  We then shift the conversation to the key metrics MSP owners need to focus on if they want to be seen as a valuable business in the M&A world. Ken Roulston highlights two that are non-negotiable. First, at least 70 percent of your revenue needs to come from recurring income. And second, at least 50 percent of that should be labour-based services like support. It’s not enough to be shifting licences. Buyers want to see strong service contracts and retained relationships.  We also talk about profitability. To be taken seriously in M&A, you should be aiming for at least 15 percent EBITDA. Anything under 10 percent means your business probably needs tightening up. Once you hit that 250k profit mark, that’s when you start to attract attention from mid-market buyers. Ken breaks this down beautifully and explains how multiples work, what they mean, and how you can use them to your advantage through something called EBITDA arbitrage which is buying smaller MSPs at a lower multiple and rolling them into a more valuable group.  What stood out to me most in this conversation was Ken’s reminder that integration is the hard bit. Buying is easy. But unless you integrate the new business properly, especially around people and culture, you can lose momentum fast. This is why so many M&A deals fall down after the initial excitement fades. Culture, values and leadership all matter just as much as systems and numbers.  Finally, we introduce the new MSP M&A platform that Ken Roulston has created with Mark Copeman. It’s packed full of tools, training and resources to help MSP owners confidently navigate their M&A journey, whether they’re buying or selling. It’s aligned with everything we believe in at The Growth Hub, clear structure, expert guidance and real-world support.  So, if M&A has been on your mind or even if you just want to get your MSP into a stronger, more scalable position, this episode is the perfect place to start. And make sure you stay tuned for the next two parts in this M&A Mastery series. Next week we’ll be diving into the selling process, then wrapping up in part three with how to approach buying successfully.  Connect with Ken Roulston on his LinkedIn HERE and learn more about his MSP M&A through their website HERE.  Connect on LinkedIn HERE with Ian and also with Stuart by clicking this LINK  And when you’re ready to take the next step in growing your MSP, come and take the Scale with Confidence MSP Mastery Quiz. In just three minutes, you’ll get a 360-degree scan of your MSP and identify the one or two tactics that could help you find more time, engage & align your people and generate more leads.  OR   To join our amazing Facebook Group of over 400 MSPs where we are helping you Scale Up with Confidence, then click HERE  Until next time, look after yourself and I’ll catch up with you soon!