Unveiling the Microsoft Partner M&A Landscape: Insights from Ian Pavlik and Tim Mueller – Part 1
Welcome to the IAMCP profiles and partnership. The podcast that showcases how Microsoft partners and IAMCP members boost their business by collaborating with other members and partners. I'm your co-host, Anthony Carrano and in each episode, I'll be talking to some of the most innovative and successful partners in the Microsoft ecosystem. The International Association of Microsoft Channel Partners, otherwise known as IAMCP, is a community of Microsoft partners who help each other grow and thrive.
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Anthony Carrano:But before we dive into our interview, let me ask you a question. As a Microsoft partner and member of the IAMCP, have you wondered about the process of selling your business? Well, if so, then stay tuned because we have a great show for you today where we delve into the dynamic world of Microsoft partner mergers and acquisitions.
Anthony Carrano:Today, we are thrilled to present an insightful conversation with two distinguished guests, Tim Mueller, managing partner and cofounder at IT Exchange Net, and Ian Pavlik, who was the owner of pavlix.com before successfully selling this company, who will share their unique perspectives and experiences in this evolving landscape. Our discussion will cover a range of topics from the current trends and challenges in the M&A market to the intricacies of deal activity and due diligence. We'll explore the motivations and timing behind pivotal decisions, the criteria for selecting the right buyer, and the critical factors for successful integration post acquisition. Ian, who recently sold pavlix.com, will provide first hand account of the transition process, the role of M&A advisors, and its exciting new ventures. Pavlix was a technology company with over 50 employees and 230 customers.
Anthony Carrano:The company provided robust web portal solutions, Microsoft Dynamics implementation and customization, and managed IT services to public and private sector organizations globally. Its proprietary IP, Dynamics expertise, and a deep community roots allowed it to serve its customers both directly and through a network of resellers. Meanwhile, Tim will shed light on emerging technologies and market trends that are set to shape the future of the Microsoft partner ecosystem. IT Exchange Net is a global M&A consultancy specializing in smaller mid-market mergers and acquisitions exclusively in the IT and digital marketing industries. The firm sells leading channel partners like Microsoft, Oracle, Salesforce, and ServiceNow as well as MSPs, MSSPs, VARs, and digital marketing agencies.
Anthony Carrano:With an extensive buyer database of more than 90,000 IT and digital marketing decision makers, the firm sells IT businesses value under 30,000,000.
Anthony Carrano:So sit back and enjoy part 1 of this comprehensive guide to understanding the complexities and opportunities within the Microsoft partner M&A world. And as always, stay tuned until the end to find out how you can connect with our guest and continue the conversation beyond the podcast. Let's hear what they have to say. Alright. I'd like to welcome Ian and Tim to the podcast today. Thank you both for joining us. Really appreciate it. Let's start by telling us a little bit about yourself.
Ian Pavlik:Great. Glad to be here. Ian Pavlik. I'm the former owner and operator of pavliks.com and the portal connector. Now I am happily semi-retired running a, a charity.
Tim Mueller:Tim Mueller, managing partner of IT Exchange Net. And, thank you again guys for letting us join the the podcast today. Background is that spent 25 years as an owner operator of three different technology companies. I had successful exits with those. So I've been a buyer and a seller and now as managing partner of IT Exchange Net.
Tim Mueller:I'm a middleman. So we bring buyers and sellers together. And, I've been doing that for just about 13 years of my career. And, very gratifying to be able to unlock the value for a lot of these owner operators that have spent a good part of their lives building their businesses. So that's a little bit about me.
Anthony Carrano:Well, let's let's jump right in then, Tim. I mean, that's excellent. Why don't you share with us a little bit about what are some of the current trends and challenges in the Microsoft partner M&A market that you guys are seeing?
Tim Mueller:You know, there there are probably more opportunities than there are challenges, mostly because, you know, there's a a giant demand for Microsoft partners at this point. But as they look at the partners themselves, they are, the buyers are trying to understand a number of things. One is, you know, where do they stand with the new cloud partner program? There's been a lot of pivots by Microsoft, and the buyers are still trying to figure that out when they look and do due diligence on the sellers. And the sellers are trying to pivot as well to to be, something that is of greater value for themselves, but also for their clients.
Tim Mueller:Another one is the Copilot AI initiative. So many things we're reading right now about various partnerships that Microsoft has and the various iterations of Copilot, yet many of the partners still don't know what to do with it. They're not quite sure how to bring value to their customers. Therefore, it's hard for them to tell the buyers exactly where they stand in the Copilot ecosystem. It's getting more clear by the month, obviously, and the the partners that are the ones that are probably the most seductive have someone that is dedicated to understand where the future may be for them when it comes to Copilot.
Tim Mueller:Every one of the of our, partners should at least be evaluating where their future stands with this AI, tool platform as they become agents for it. But that's a big deal. Another part of it is just the better greater understanding of Microsoft Dynamics. You know, Dynamics seems to change, at least every 18 months in some fashion, and a lot of the partners are still trying to figure out where their place is within that Microsoft Dynamics piece. And, and so if it's difficult for them, it's really hard for our buyers.
Tim Mueller:But overall, the the number of buyers out there that are asking us for more, what we'll call targets, for acquisition in the Microsoft ecosystem seemingly continues to increase by the year.
Anthony Carrano:That's fantastic. And let me ask you this then. So as a piggyback question to that, so I know you mentioned, like, 3, you know, you know, evolutions, like, with the technology around cloud Copilot and just, you know, with Microsoft Dynamics. What other how are these trends, you know, aside from just, you know, around those three technologies, what are are there any other trends that have evolved over the past years in this in the M&A market?
Tim Mueller:Yeah. Well, private equity in general, they're sitting on about a $1,000,000,000,000 of dry powder. So that's money to be deployed. And that is their full time job is to find good businesses to deploy it and then help it get to a future exit 3, 5, 6 years down the road. So the money is out there in the private equity side.
Tim Mueller:From the strategic side, so think businesses that are just like yours as a Microsoft practice but bigger, those are strategic buyers. And they have shareholders, boards of directors, and they don't accept the fact of each one of these businesses growing at 10, 12, 15 percent per annum, which is pretty much the standard for many practices. And the only way to address that shareholder pressure to grow revenue is by acquisitions. And so because of that, you have both a kind of a perfect storm of a lot of money sitting out there from private equity to be deployed, and then shareholder pressure from the strategics are saying, you must grow your revenue so that the accretive value, the the long term value of their business is higher. So we're seeing that as a couple things.
Tim Mueller:The other part too is there's a strong demand from the buyers to the Microsoft partners to say, increase your recurring revenue. Because so many partners over the years have been kind of eat what you kill, project based. And to get the highest valuation, Azure helps them quite a bit now with more recurring revenue, is to increase that. And that is based on contracts that are either, monthly, not as sexy, or yearly or or multiyear, which is incredibly seductive for the buyers because what that does is mitigates the risk when they're coming in to buy one of the partners.
Ian Pavlik:Can I can I just jump in and sort of on that point, I think, you know, I mean, I'll get to sort of my story in a minute, but that recurring revenue element was something that Tim hit on early with us, and I was able to, bring to light when talking to potential buyers. But I also realized in that it was a an important part of our strategic, initiatives back in or I say around 2012, 2013 when we started to grow our recurring revenue. I can't emphasize that enough and agree with Tim that whatever partner is out there, focus on recurring revenue if you want to exit at some point. It just increases your multiple enormously.
Rudy Rodriguez:Tim, I've got a question for you. You know, you've talked about the maturation of the industry and the challenges that are take that, you know, switching to generative AI and and partners adapting to to the marketplace, and the value that they provide their customers. Has that affected any of the deals that you've been working on in the in the Microsoft partner space? You know, has it increased or decreased, the activity or the volume of compared to previous years?
Tim Mueller:That's a really great question, Rudy. And and I would say that, compared to, say, pre-COVID, it's a vastly different world right now, partially because what's has exploded with, you know, OpenAI and then you have, you know, Gemini through Google and and other tools. And, really, what they are right now is mostly large language model tools that help people. That wasn't necessarily a huge demand pre-COVID because it wasn't even though it's been around for 10 years in some form or fashion, it hasn't really hit kind of commercial status. Today, it does affect the way that the buyers look at our clients to say, if you haven't figured out what your strategic initiative will be, at least, are you thinking about it and tell us your vision?
Tim Mueller:And so, yeah, that is probably dissuade some buyers from moving forward with some of our clients if they at least didn't have some rudimentary knowledge or some kind of long term strategy on how to best implement it.
Anthony Carrano:Tim, thank you. That that's fantastic to give us a sense of the general M&A landscape. I really appreciate that. So, Ian, let now let's talk about you because you had your business, pavlix.com with a successful liquidity event. Tell us a little bit about, you know, why you decided to sell, and, what were some of the, like, the motivations there?
Ian Pavlik:I started the business back in the mid-nineties. And for probably 15 years or so, it was really a lifestyle business. It was a business that we, like Tim alluded to, we grew at an average 10, 15% a year. It was a means for us to live a comfortable lifestyle and, wanted an exit at some point, but really didn't, focus heavily on it. It wasn't until around 2010 when I started to put a pin in the future and said, I wanna exit at some point.
Ian Pavlik:In order to do that, the math has to work. And it was strategic decision, but it required a lot of conversation amongst the owners. I was a majority, owner, but my it was a family based business. I had to talk to the family to say, this is what I wanna do, and this is where I wanna go. Are you on board or not?
Ian Pavlik:And so it required a lot of conversations over a number of years to get everybody pointed in the same direction to say yes. What if and when the the opportunity presents will pull the trigger. I think having to wait until there was an opportunity put on the on the table and then try to decide on or do we wanna exit is probably fraught with problems. So we were we had those conversations early, but, it was it was a decision that I wanted to do things in my life that weren't revolving around the business. And I realized in order for me to achieve those goals and desires, I needed to sell the business.
Ian Pavlik:I needed that liquidity event that you talked about. So it was really a means to the end to an end for me, but it required that, those tough conversations with family. And and just with the Key family, really wasn't something that I openly shared with the team to say that I wanna exit someday, but I know that everybody knew at some point it was inevitable.
Anthony Carrano:Now I wanna I wanna kinda go back to something you had mentioned earlier. So when, you know, when Tim was talking about the general M&A landscape and, you know, the conversation around, you know, the importance of increasing reoccurring revenue, to drive up that multiple. Now, you know, as our as our listeners know, as I I shared in the opening, you know, about Pavlix that, you know, as a as a tech company, with over, you know, 50 employees and 200, you know, plus, you know, customers that you guys provided, and correct me here, you know, in that, you know, robust web portal solutions, Microsoft Dynamics implementations and customizations, as well as manage IT services to public and private sector organizations globally.
Ian Pavlik:Yep. Hang on. Yeah.
Anthony Carrano:That was, that was the business. Talk a little bit about the because I'm I wanna keep that point where you said we we really focused on, you know, on wanting to drive up recurring revenue, right, to to increase the multiple at the exit. Can you, you know, talk a little bit about what was either maybe, like, some of the decisions that you made, to to do that, but also just some of the, you know, inflection points, that are in the in the conversation with the family, to kinda shift that, right, that mindset. Because I think a lot of our, you know, our listeners, you know, in the community, they're they're, you know, they're out there building their business, and it's it's it's there's a lot of information out there that talks talks about, you know, oh, you need to do this. You need to do that.
Anthony Carrano:You need to get to this number, etcetera. But I really wanna hear what, like, that going on in the mind of the family. Right? And and those the nature of those conversations. Can you can you share some of that?
Ian Pavlik:Sure. Yeah. It's I think it really comes down to realizing that when you have the goal of exiting and knowing that recurring revenue will help us achieve that end result quicker, the early on pain of moving to recurring revenue becomes an easier decision. You know, you you do these projects where you get the nice big bang or hit a revenue, or you say, okay. I'm gonna reduce that, you know, that deal size initially by half or even 70%.
Ian Pavlik:But I get a recurring that's gonna, you know, forecast out 4 or 5 years. That's a hard one sometimes to initially accept on the cash flow side because suddenly you see a bit of dip in your numbers or you got your salespeople having to sell differently or explain things to your customers. Marketing's gotta market differently. There was a whole number of conversations that we all have to be on the same page to operate the business differently. But it took a couple years.
Ian Pavlik:Again, I'm going back into sort of the late teens. But what it's it's like a snowball. Right? As soon as it starts going, it becomes the easier way, and you start to get the salespeople being excited because now I get commission for the next 3 years, not just next month, and and that starts to evolve. I think for us, it was then it became a strategic decision for each of my department heads to say, how can you convert some of your service work into recurring contracts or find add on partners or elements instead of pitching a $100,000 service project, it might be an $80,000 one where we also include some components that have recurring revenue and licensing or service or management or what have you. And that just took a bit of education and training. And, but it but it was a strategic decision for us across all the different departments.
Anthony Carrano:Mhmm. I've got, like, two more two more questions around this this decision to sell. So I appreciate you kinda flowing with me on this, Ian. Now what do you what advice, like, would you give to, you know, other, you know, owners who who let's say they're in a multiple ownerships, partner situation. You know, the majority owners, like, yeah, I wanna look for, you know, a future exit, but maybe their, the other partners aren't on board.
Anthony Carrano:So what would be some things that these are maybe, some advice you would give, questions to encourage them to ask, things to think about to help move that needle internally to get alignment around that type of of an event?
Ian Pavlik:I think it's open conversation, but it just say, "Hey. Are you interested? What if?" Have those "what if" conversations.
Anthony Carrano:Mhmm.
Ian Pavlik:But, also, I what worked for us was throwing out real scenario, and I would come to the table with our, group of owners and say, okay. Let's say we got an offer like this. This was the number and this was the situation. How would you feel about it? And then what that allowed was a real feeling of, "Woah. No. Hey. I couldn't. Yes. I could. What if we were to sell tomorrow and you had to leave 3 months later? What if we sold in 6 months and you got half of what you need, but you could stay on for 4 years? How would you feel about that?" So we had those real scenario conversations, and it sparked up feelings of I don't want someone to be my boss, or, that's not enough.
Ian Pavlik:I don't know what is enough money for me. And once they once and that was actually a big one. What is enough? So if somebody is a minority shareholder and you get to decide definitively whether we're gonna buy or sell, and they end up with enough of what or what they feel comfortable with, if if it's something they feel comfortable for their share, then they're gonna make the transition and the sale process a lot easier and smoother. But if you're pushing that rock up a hill and convincing them something that's not right for them, then, it just makes the whole thing a bit harder.
Anthony Carrano:So, Ian, you shared a lot of great, you know, background information. Really appreciate your transparency with our audience. Were there any other, like, market conditions, or circumstances that also played a role in this decision to sell?
Ian Pavlik:Well, I think a big influence was COVID, to be honest. When COVID hit, initially, in those first for first few months, it was hard. It was really hard for us. Just the whole cash flow issue.
Ian Pavlik:And and, you know, as any business owner, there's ups and downs and and, struggles, and not just was, this this sucks. But then but then we got a huge rebound. And in the in the couple areas of our business, everybody needed that service, and everybody need that portal solution, and everybody wanted remote working. And we rebounded like crazy, and suddenly inside of, like, 6 months past what was probably one of the hardest cash flow scenarios was suddenly we grew by, like, 40%, and now we're trying to deal with hiring and and whatnot. So for us, that was a a an interesting time to navigate.
Ian Pavlik:We came out of that year of of big dip and big rise, and then I was wondering, so what what are we worth now? What's the market gonna pay for us? And that was really the the burning question. I didn't fully understand what our multiple might be and how that might play out. And that was sort of the beginning of me thinking, okay.
Ian Pavlik:We're sitting at our the highest revenue we've ever had. And I now I wanted to know if I were to go to market, what would the what would the offer be? And that was when I started to do my research, and, thankfully, I came across, Tim and and IT Exchange Net.
Anthony Carrano:That's fantastic. That's that's really, really great. And I know, you know, Rudy has with his accounting background, he's got several questions about some due diligence. So, Rudy?
Rudy Rodriguez:Yeah. You get to hear all this, Tim, because these questions are for you. This is my favorite background. As a former auditor and having done a lot of due diligence and having, not only sold a couple of companies, but we bought 28, in the process. Due diligence, I drove everybody crazy with those two words, due diligence, because there's two sides to that story.
Rudy Rodriguez:So can you tell us a little bit about what you focus on during the due diligence process in in on these M&A deals? Because that's so important on both sides. Can you tell us a little bit about what you focus on?
Tim Mueller:It is, Rudy. And I think it first and foremost, it starts with preparation. We do an onboarding process with our clients just like we did with Ian and his team to give them a little bit of expectations of what are what's to come. One of my mentors, Mark Morgenstern, always says that expectations unarticulated is disappointment guaranteed. And so we wanted to make sure that they had expectations that it was gonna be, it was gonna be time consuming, and it's gonna be unending until the deal is closed and the money is transferred.
Tim Mueller:And so the idea of being able to give our clients a really detailed list of the things that they will be asked for, whether it's operating agreements, shareholder agreements, it's employee records, customer records, things on that line, so that they can start populating a data room ahead of time because many of the buyers will be looking to see what kind of figure do they have on the pulse of their business. And if simple data requests for due diligence takes weeks to get to, that tells the buyers a lot about the way that the business is run and the organization of it. And so, it spans from not only the financial side of it, but all the way through to technology audits. And and if in fact you do have a a like, the the portal platform solution that Pavlik had to sell, you really wanna look and see even down to the source code how brittle or how strong the code is and how scalable it could be. Due diligence also comes in the form of something called the quality of earnings report, where most of the the more sophisticated buyers will hire a third party, and they will do a quality of earnings, otherwise known as a Q of A.
Tim Mueller:So, a Q of E, I'm sorry, report that allows them to really do a forensic audit of the business and trail where all the money comes from, how it's categorized. In fact, does it reflect what was promoted by the seller during the beginnings of the conversations? And, and then, you know, equally important is that how you bet best state your EBITDA and your adjusted EBITDA. And the adjustments are really just add backs that, in the simplest terms, you look at a buyer that says, alright. I know all the different expenses you had were were fine with the IRS, all above board, but likely, we're not gonna pay for those after the transaction.
Tim Mueller:So think, you know, Yankees tickets or running a company car through the business or country club that you use to entertain clients. A lot of those expenses would not be assumed by the buyers, so those are considered add backs into your EBITDA. And that helps the seller quite a bit because most of the, much like with Pavlik, you know, most of the the offers are made on a multiple of your adjusted EBITDA. So if you do put add backs in to show what the future state of the business will be, that will help your transaction value.
Rudy Rodriguez:Well, I've got a I wanna drill down a little bit on on couple of things that you mentioned there because these are things that, from personal experience, that bit me pretty hard, in in acquiring companies is how do you assess a company's technology and the value that that's gonna bring to an organization? Because that's one of the challenges, you know, in future integrations that take place. Then also taking a look at at their customer base and, you know, how good that really is, especially from a recurring revenue standpoint because you've mentioned earlier on about the length of certain contracts. And because all these help you in market position, and and just when you acquire someone, that's really challenging for the buyer to to acquire and assimilate those companies because there's a cultural component as well as a financial component. Can you share a little bit about how you assess those things?
Tim Mueller:Yeah. And and having done a couple dozen transactions, Rudy, you know that you've both benefited and not benefited from that. And I'm sure if we turn the mic back over to you, you could show tell some more stories of of how those things have occurred. But I'll start with the second question first and then go to technology. Customers all customers are not, you know, made equal.
Tim Mueller:You know, many of the different buyers are looking for customer concentration. Meaning, do you have any one customer that represents more than, let's say, 15 or 20% of your total revenue? And if you do, that creates a great risk for the buyer for the obvious reasons. You know, if you buy the company and that that company, that, the client that represents 40% of your revenue is gone, Now it's not the same company that you thought you bought. So customer concentration is one big issue that buyers look at when they're doing their due diligence.
Tim Mueller:Secondly is the the term of recurring revenue. While those two words are some of the most attractive words in our industry, they also, mean things differently between buyers and sellers. Many of the sellers say, alright. Recurring revenue, we've done business with these guys for 10 years. We can count on their business every year, but it's not backed up by any kind of contract.
Tim Mueller:And so if the business is not contracted to do something over a year or two years, buyers will not necessarily categorize that as recurring revenue. And so that is a is a rude awakening for a lot of sellers when they get into that due diligence. And then lastly is, you know, is that revenue something that is of strong margin? You know, revenue that is low margin work. You think in the past with VARs on selling computer equipment and how razor thin those margins have gotten over the years versus something that is like a SaaS platform that has high recurring revenue because it's backed by a contract, but it's high margin because at a certain point, you're just doing updates to it, and it just kind of makes money.
Tim Mueller:It it it produces money. So, that's a little bit of about the recurring revenue and and the kind of due diligence that we see with with the financial side. On the technology piece, one of the biggest questions that our buyers have is, is it scalable if we try to take that technology or some kind of process and drop it into our client base? Because many of the buyers, when they look at an acquisition, they not only say what can that company do, to bring a new service offering to our current service offering, but how can we cross pollinate our services between each customer base? And so, if a technology that has been developed doesn't have really the the, firepower or the muscle to be able to scale, then that due diligence piece of it is gonna probably fail.
Tim Mueller:There are some sophisticated buyers that do have their own, you know, kind of forensics where they go in, and they'll they'll be, you know, someone that looks a lot like Ian that sold his business or her business, and they're an expert in a certain area. And private equity firms or strategics may hire them to go in. And just during that due diligence of the acquisition, as the expert in the room, really tire kick and and stress test that technology to make sure that it is what has been purported.
Ian Pavlik:Can I just maybe add something to that that I think is relevant? When we were selling and the portal connector was a piece of technology that was part of our our offering. We had a vision of what we thought its future looked like and how it could evolve and where the technology could go. And that was how we spoke about it and spoke to its value. In the end, the company that acquired us had a very different perspective on its value and has taken the technology in a slightly different direction.
Ian Pavlik:All very valid and very good, but just not the way that we were looking at it. So I think in hindsight, being open minded to how your technology that the the buyer is potentially acquiring will be used is just something that you need to consider.
Rudy Rodriguez:Yeah. I'd like Ian, I'd like to follow-up on that because I know when you're selling your company, it's like selling your baby. Right? So it's yours. You built it. You put your you know, all your blood and sweat and tears and everything into into building your company. And then, you know, it's it's great to hear from Tim on the structured due diligence process because we you know, that's foreign to you the first time you sell a company. So what were the challenges that you may have run into during the due diligence process that really got to you? I know some of them are not easy and some of them take a lot of time. So So what were the most challenging aspects of of the due diligence process?
Ian Pavlik:For me, I would say it was two things. First say that what I think worked well for us was I had a very strong handle on and I was big on numbers. I loved to manage the company by the numbers, and I had spreadsheets and reports and ways of tracking everything, which really helped during the due diligence process so that, you know, I didn't have to go digging and creating certain forecasts and so forth because I kinda knew all that stuff right away. So that worked for me. But it's it is, tough to open up and say, here's my customer list.
Ian Pavlik:The actual names of the customers, here's the revenue by each one because you wanna go and explain. This is why this customer dipped last January, and this is why we lost this one but got this. And so there's a story behind all of it. You can't always tell every story about every bit of data that is there. You have to hand it over in a way that hopefully informs the the buyer enough that they understand it.
Ian Pavlik:So that was something I wanted to talk more about it than than was really possible. And I'd say also a hard part was keeping that circle small during the due diligence part of who I brought into that circle to help pull the data together. So there are some people that could aid in it, but they weren't people that I felt comfortable at that point in the sale process to let them know the reason I need you to or the reason I need this source code, the reason I need that report. Could you please give me a summary of what a a more detailed forecast of what this this sales forecast for your customers. Well, why do you need that?
Ian Pavlik:You never asked for that before. Well, so that those were some some of the the challenges that we faced. But, the process that Tim led us through initially of the the homework saying here's the data ahead of time that you have to prepare for it. I probably spent a good, I don't know, I'd say 6 to 8 weeks, about 50, 60% of my time gathering that info ahead of time before the due diligence process started so that so that it was there and I wasn't distracted trying to do the gathering of the data at the same time as all the other things that go along with meeting with potential buyers.
Tim Mueller:You know, one thing I will add on that one is that we were lucky with Ian is that a far majority, I wanna say 75% of the Microsoft partners who decide to sell don't have the ability or have not been able to build their business to have the time that Ian did to put into that. They they don't have the infrastructure behind them or the team members to run the business. And so Ian did it perfectly, really. He did it so the fact that he became less significant by design to the business, so that not only the exit would go smoothly and the buyer would not necessarily need him to stay on for 2 or 3 years, which wasn't his game plan, but also for the ability to, you know, answer the call when data was needed for due diligence.
Tim Mueller:So, I would say Ian's deal was a little bit atypical in that sense because his listeners here from Microsoft partners hear, him talk about that. I think they might get discouraged pretty quickly to say, gosh. I'm not sure I've got the time to do it because I'm still doing new business development or I'm still doing some execution or operations. So I just wanna make sure that is is clear as an anomaly more than anything.
Ian Pavlik:And and and to that point, it was a decision probably 10 years prior to exiting that I knew that in the beginning of my name was in the the title of the business. But strategically, I was trying to ensure that I was not what the customers wanted to speak to or talk to or interface with. I wasn't part of the sales process. I wasn't part of the service delivery. I I sure things were escalated to me if it required.
Ian Pavlik:But I worked hard at that because I knew that at some point if I wanted to exit, I didn't want the buyer to require me to be around because I was some sort of, you know, pin that you know, everything kinda went through. So yeah.
Rudy Rodriguez:Well, you know, I will tell you, you're a lot smarter than I was during that process.
Ian Pavlik:Just lucky, maybe. But it's but it's it's a bit of an ego thing too. And I I've got a lot of business partners. I was in, some peer mentoring groups like Vistage or Tech up here in Canada. And, and there's a lot of people who and and that's goes back to the beginning.
Ian Pavlik:The business was a, means to an end for me. It wasn't my, my reason, and it didn't deliver those the the core of what I wanted to do with my life. And for some people, it is. And that's great. Right?
Ian Pavlik:So they're not knocking it. But if if if your identity is tied to the business, then it becomes far more difficult for you to become less, less involved, less important. Because when the deal was done, I was no longer president and I wasn't key. And when I walked out that door, nobody called me. My phone stopped ringing.
Ian Pavlik:And you need to be okay with that. I know that sometimes some people aren't. To each their own.
Anthony Carrano:This wraps up part 1 in our interview with Tim and Ian. The first part of the podcast episode delves into the intricacies of the Microsoft partner M&A market, highlighting the increasing demand for Microsoft Partners driven by private equity and shareholder pressure. Key trends include the importance of reoccurring revenue, the impact of technology like Copilot AI, and the evolving landscape of Microsoft Dynamics. Ian shares his experience of successfully navigating the sale of his business, emphasizing the significance of preparing detailed financial and customer data for due diligence and strategic shift towards reoccurring revenue. Tim adds insights into the due diligence process, stressing the necessity of scalability and low customer concentration for a successful transaction.
Anthony Carrano:Thank you for joining us today, and be on the lookout for part 2. In the meantime, don't forget to follow us on social media and connect with us on our website, www.iamcp.org, where you can find more information, resources, and opportunities to partner for success. One of the best ways to partner for success is to join IAMCP, a community of Microsoft partners who help each other grow and thrive.
Anthony Carrano:IAMCP members can finally connect with other partners locally, globally, and access exclusive resources and opportunities. Whether you're looking for new customers, new markets, or new solutions, IAMCP can help you achieve your goals. To learn more, visit the IAMCP website at www.iamcp.org.
