I have always believed the master service provider business model to be unscalable.
I also believe that master service providers have financially unsustainable models without continuous outside investment dollars.
However, if everything is perfect with the master service provider model, it would be an excellent service to the industry if they all shared their financial numbers highlighting their success.
The question is, what if they are not profitable?
If some businesses get sold with little celebration, is that an indication there is nothing to celebrate?
I was thinking of the fanfare, which followed the ConnectWise sale to Thoma Bravo.
Remember all the great press congratulating Arnie Bellini?
Remember the numbers that were released? Not only were they massive, but the world was also made aware of just how successful Arnie and his team at ConnectWise were.
So, where were the celebrations when Thoma Bravo bought Continuum?
Did Thoma Bravo simply bail out Continuum's previous private equity partner from a questionable investment?
It does seem that Thoma Bravo did have a plan as we recently witnessed Continuum sold to ConnectWise.
However, this is the second sale of Continuum.
Of course, PE companies don't have to share their numbers, and private equity is a great place to hide when investments are stalled in reaching their acceptable ROI.
Food for thought for MSPs
Why is this observation important to MSPs?
Well, if the reality is that Continuum was not profitable enough after a decade in multiple private equity relationships, the MSPs on that platform should take note and question why?
The bottom Line is MSPs should know the level of Continuum's success.
Any organisation can grow in size and have a massive customer base if they are void of the responsibility to produce healthy financials, and simply get continuous outside cash infusions.
It does seem that private equity likes to throw money at things, banking on what I call "A hope it works out platform."
Instead, I think MSP community members who depend on master service provider platforms should demand to know the financial details of the master service providers they trust with servicing their end-users technology infrastructures.
Ask the tough questions
MSPs should perform due diligence on their master service provider.
ConnectWise is a hugely successful business on its own. If Continuum was not, how long will ConnectWise invest in a failing business model?
The market should also be aware of any threats to Continuum's stability, or, the changes ConnectWise may make to bring stability to Continuum if needed.
In these times of buyouts and private equity investments, MSPs should not only question their deliverables, but they should also examine those partners they outsource the services of their end-users to.
All MSPs are asked to provide their credit information by every product manufacturer, software provider, and yes, sometimes even the master service providers they outsource to.
Maybe it's time MSPs demand credit information on the master Service providers they themselves hire.
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