Private equity firms have a challenging and risky job to do, and that's just when it comes to finding the proper organization to fund. While the challenge is great, the reward for their hard work is exponential. Before private equity firms realize a profit, they must overcome many challenges with a newly acquired organization, including creating financial stability, becoming profitable, managing a newly acquired staff, and increasing operational efficiency.
How can a managed service provider (MSP) benefit a private equity firm?
Having a well-developed and trusting relationship with an MSP can benefit a private equity firm in the following ways:
- Initial acquisition tasks will run as smoothly and productively as possible.
- Time and headache related to IT management, operation, and security will be greatly reduced.
- IT downtime will be minimized.
- Investments will reach profitability far more quickly.
Each of these benefits can ultimately prevent private equity firms from wasting money. As an example, let's take a look at a fictional private equity firm (we’ll call it XYZ Partners) and a real MSP (say Bit-Wizards). XYZ Partners just inked a new deal taking a controlling interest in US Widgets, a manufacturing organization with nine locations across the U.S. XYZ Partners needs to return US Widgets to a profitable status within 36 months to reach their goals.
Once the deal is complete, XYZ informs Bit-Wizards to review US Widgets’ IT infrastructure. Bit-Wizards starts by probing the current network and scanning all devices, workstations, servers, cloud devices, email services, and other IT components. In less than a week, Bit-Wizards has a detailed picture of how the IT infrastructure is configured and makes the appropriate recommendations for a course of action.
In addition to increasing efficiencies within the IT infrastructure, Bit-Wizards also takes control of workstation management, protecting each endpoint within the newly acquired organization. Bit-Wizards will work on updating and maintaining each workstation with the latest updates and security patches while identifying critical areas that are ready for hardware and software upgrades. This step increases current output with increased efficiencies. More output equals more revenue, and more revenue leads to quick returns on XYZ Partner’s investment.
After that, Bit-Wizards finds that none of US Widgets’ locations are interconnected, network security needs to be beefed up, and all the company’s data is in separate, on-premises servers.
What does this mean?
As the managed services provider, one of the first things that Bit-Wizards does is secure the networks by placing firewalls at each location and interconnecting each US Widgets location. What benefit do firewalls and interconnecting the locations have? Once the networks are secured and interconnected, Bit-Wizards starts migrating all servers and data to an organized, centralized cloud location. Centralization of the data will both protect the data and provide XYZ Partners a single location to start analyzing the documents they need to perform other financial and organizational tasks (the cloud enables everyone with permissions across all locations to view and manage these documents).
Next, Bit-Wizards migrates each employee's data to a modern productivity suite. In this case, it's Office 365. While the migration is in progress, Bit-Wizards also modernizes and secures each workstation and IoT device (like smartphones, tablets, etc.) on the US Widgets business network. The move to Office 365 for email services and device management increases overall security and employee efficiency.
The final item that the Bit-Wizards Managed IT Services team completes is providing a fast and friendly Help Desk to US Widgets. This Help Desk provides higher efficiency for the employees and minimizes the downtime for any malfunctioning technology issues. Employee inefficiency and downtime both contribute to lost revenue, so eliminating these as much as possible will help US Widgets become more profitable at a faster rate.
Let’s say US Widgets is already modernized... what else can Bit-Wizards help with?
It’s great that US Widgets is already leading the charge on technology modernization, but there are still essential items that need to be addressed within a newly acquired organization, starting with network security. While each private equity firm hopes for the best, they really should plan for the worst, and company acquisitions are an area where IT security needs to be on point. Bit-Wizards' Managed IT Services include a complete overhaul of the IT Infrastructure to beef up network security and lockdown documents, such as financial data or proprietary processes and documentation.
Not only does Bit-Wizards prevent critical company data from walking out the front door and ending up in the hands of a competitor, but we also start analyzing US Widgets’ networks for backdoors and vulnerabilities.
Bit-Wizards is in control of IT. Now what?
Well, we don't just get to call it Mission Complete and walk away. Remember, this is still a trusted partnership between Bit-Wizards and XYZ Partners. Our job is far from done.
Once Bit-Wizards flushes out all the IT issues, while providing Help Desk support and securing the networks and components, future planning begins. This means that we will develop a strategic plan to replace aging equipment, network components, processes, and other IT items that could degrade the IT network if left unchecked. Providing this plan to XYZ Partners allows them to quickly make technological decisions while maintaining a clear path towards their ultimate goal of profitability.
Having a member of your firm that can handle the IT aspects of the new company acquisition is certainly a bonus and depending on the size of the newly acquired business, it might seem easy. However, things can spiral quickly once you get above 10 employees or add in complicated IT processes, not to mention multiple locations. You also need to ask yourself if it’s a good use of your firm’s time, money, or expertise.
This situation is why many people pay someone else to change the oil in their car. Sure, you could do it yourself, but is it worth it? For your firm to operate at the highest efficiency and profitability, placing the right people in the right roles is a requirement.
Through advanced certifications and training, the Bit-Wizards team stays up to date on all the latest technology, including cutting-edge hardware and software developments. This allows our Managed IT Services department to continuously analyze your network with a fresh set of eyes, offering innovative solutions to your business.
With the additional staff, resources, and expertise that Bit-Wizards brings to the table, it becomes a business decision on just how fast the private equity firm would like to move to profitability. As an example, maybe XYZ Partners attempted to tackle IT before bringing on Bit-Wizards and found it overwhelming. That’s when we were able to come in, streamline processes, and flush out issues. Financially, XYZ Partners could have saved money by handling IT internally, but at the added cost of delaying their profitability by over six months, amounting to over a million dollars in lost profits.
Is partnering with a managed service provider worth it?
Every single business has business decisions to make, and outsourcing is one of those decisions. In the case of a managed service provider like Bit-Wizards and a private equity firm like XYZ Partners, it makes business sense to outsource IT. This is the case for most private equity firms that need to quickly reach profitability within a newly acquired business. Managed service providers can quickly take control of a company’s network and rapidly flush out problems because we do it every day.
There are a lot of options when it comes to selecting an IT partner and selecting the right partner can sometimes be as difficult as acquiring a new company. Partnering with Bit-Wizards as part of your overall business strategy aligns your goals with our processes. This means that we will learn how your private equity firm conducts business, what the critical points during your acquisitions are, who the main players are within each acquisition, and how your new employees are onboarded within the IT process. We will start to anticipate your firm's moves and prepare in advance. As Bit-Wizards becomes more accustomed to your way of doing business, we’ll increase your agility to navigate the acquisition and profitability journey.
Private equity firms can choose to figure out IT for themselves and possibly waste months or even years before things are straightened out. This is the case for many businesses. But when speed, efficiency, and quality affect your bottom line, it's time to involve a managed IT services provider like Bit-Wizards. Is IT keeping your private equity firm from reaching its true potential? Then it's past time to have a conversation with Bit-Wizards. We'll show you what a trusting partnership can do for your bottom line.