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Acer America
Acer America Corp. is a computer manufacturer of business and consumer PCs, notebooks, ultrabooks, projectors, servers, and storage products.

Location

333 West San Carlos Street
San Jose, California 95110
United States

WWW: acer.com

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August 25, 2023 |

The 20 Stresses Growth by Example at Vision 23

At The 20’s Vision 23 conference, CEO Tim Conkle told MSPs there’s plenty of opportunity in the market to grow, and his vision is to continue acquiring companies.

Vision 23, the annual conference for members of The 20 and those interested in learning more about the group, opened Tuesday evening, August 23 (and ran through August 25), with a poolside cocktail party at 5 PM in Dallas, when the temperature hovered around 102 degrees. The keynote presentation the next morning, inside the full meeting room, was even hotter in a “Let’s Grow!” way.

Founder and CEO Tim Conkle focused his speech on two things: moving from good to great, and the decision to make that leap.

Conkle trotted out a few statistics, but one targeted the audience perfectly: “94% of MSPs never hit a million dollars in revenue.” He explained that if you want to grow to be a $10 million company, don’t follow a $2 million dollar company. Make the decision to move from good to great and align yourself with a leader who’s made that journey. “The fastest path to anywhere is following the footsteps someone else made,” he stressed.

The 20 offers volume purchasing and back-end services support to individual MSPs. The 20 members take advantage of the group’s national scale by offering pre-chosen products from specific vendors and relying on the U.S.-based help desk run by The 20. The 20 culture spreads between the group and each MSP group member.

Conkle’s long-term strategy has also included a unique private equity play, acquiring member companies who already fit with the culture of The 20 and their fellow MSPs. “The 20 will never stop buying IT companies,” Conkle told the audience.

Indeed, over the past 12 months, The 20 has purchased 23 IT companies. “In the next 12 months, we’ll buy 30 or 40,” said Conkle in an interview with ChannelPro at the event. This gave him a national MSP footprint while maintaining the local MSP customers’ relationships. “Every million in revenue we buy adds $1.4 million in enterprise value.”

He continued, “My mission was always to build a group, line them up so they all look the same, then begin to buy them,” he explained.

Conkle outlined to ChannelPro the struggles PE firms have when acquiring MSPs. “When a typical PE firm wants to buy a company, they have to figure out if the owner is worth keeping, how long tool integration will take and cost, and worry about the culture. There’s usually a 30% attrition rate in PE firm buys.” But not for MSPs acquired by The 20. They share the same tools and culture, and each owner must stay as a shareholder. The majority stay as employees as well.

“We de-risk them. Give them lots of cash up front, and they have to reinvest some back in,” and become shareholders, added Conkle. His acquisition process also saves the sellers over $100,000. “The average MSP sale costs them $150,000 in legal and other fees. We’re less than $15k for my side and the MSPs now.” Those saved dollars stay in the owner’s pocket.

“I want to make 500 people millionaires,” he stressed.

For MSPs, that goal seems achievable in light of digital transformation demands, according to Fred Voccola, CEO of Kaseya, who joined Conkle on stage during the first afternoon of the event. The discussion was labeled “State of the Channel – Straight Talk,” and they held nothing back, including F-bombs.

“SMBs are investing in technology like never before,” Voccola told attendees. Digital transformation is now hitting companies with 500 and fewer employees, he added, and the 4x growth of IT spend over GDP growth is the rising tide raising all boats. “Even bad MSPs are doing better than ordinary GDP,” but the spread between the top MSPs and poor MSPs is growing, he noted.

At the same time, “demand for MSPs has never been higher,” said Voccola, “with low churn and recurring revenue.” This has led to an active mergers and acquisitions market, with over 2,200 MSP deals­ last year. “MSPs are getting used to being business owners, not tech guys.”

Another trend Voccola mentioned was co-managed deals with medium-size companies. “They have between 100 and 2,000 employees, with one to 10 IT people, so they need MSPs.” A three-person IT shop often really needs six techs, so these companies are turning to MSPs for help. These co-managed deals are to provide help to understaffed companies, he added, not a complete takeover of their IT operations.

Conkle and Voccola agreed that digital transformation is changing every single business. “If you can’t build an MSP, Fred and I can find $10 million dollars’ worth of business in this neighborhood,” challenged Conkle. “Put on a pair of Nikes and just do it. If you’re scared to make a mistake, you’ll never improve.”

Conkle challenged attendees to meet one person who runs a bigger company than theirs, and say, “I’d love to know how you do it.” Then, find a smaller company and offer to help them improve.

His repeated catchphrase was: “Better together, win together.”

He ended his keynote with a question: “We’re all businesspeople, and our No. 1 goal is to grow. The question is, are you brave enough?”

 


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