You’re absolutely right. Blogs, articles, answering questions on LinkedIn, distributing tidbits on Twitter, etc. can quickly turn an expert in a specific area (e.g. networked storage, document management, regulatory compliance) into a world renowned thought leader and trusted advisor. The niche of expertise is fairly tight, but the reach is global. The difficult part is finding the time to do the above activities. We help our clients plan and execute social media, so there’s a minimal drain on their time.

Bob

- Neil

Thanks for the comment. Your knowledge of business finance is much deeper than mine. The one point you make that I can elucidate on is the product related one (one of the four Ps).

Product mix is another piece of the pie that I didn’t see anyone reference when I did my research, but certainly would affect profitability.

If I was buying an MSP, I’d look at Balance Sheet and Cash Flow in addition to Income Statement. On the latter, I certainly would look at current and booked revenue for a particular time horizon, and of course pre-tax profit. But ‘Net Profits’ and EBITDA aren’t the same. I probably would look at EBIT vs. EBITDA. Why would anyone pay full value on an asset that has undergone some level of amortization and depreciation? You wouldn’t pay new sticker price for a 3 year old car. Also, the interest a business is paying draws down available cash. Finally , if the business has tax losses, those could be an ‘asset’ with some economic value to the acquirer (maybe not so much in this economy…).

Of course, the MSP’s business environment is another factor. If the business is in a growing area/technology, it is worth more than the opposite. Simple example: ISDN videoconferencing (from an ongoing business perspective worth little these days apart from possibly being able to migrate the customer base to something new) vs. types of IP videoconferencing (some are worth alot more than others). This is true regardless of what the ‘books’ say.

Hope this helps,
Lisa

As far as I could tell, they don’t get down to that level of granularity. I have to believe, though, that as people understand how important websites have become in B2B (as marketing and pre-sales tools); it won’t be long before they take into account website traffic and conversions. As you know, with Analytics it’s easy enough to record those online statistics. Thanks for the comment.

Bob