The MSP Law Podcast

Post-Covid Mergers and Acquisitions for Managed Service Providers

Did you think the slow down would be for a while?  Look for activity to start again mid-year and go roaring into 2021.  Here are my thoughts about MSP sales, mergers and acquisitions.

MSPs and Payroll Protection Program Loan Forgiveness

Learn about the loan forgiveness provisions of the CARES Act and Payroll Protection Program.

PPP for MSPs - should I take it or return it

The Paycheck Protection Program has a safe harbor for returning funds if you cannot satisfy the requirements of certification. Learn the background and what those requirements are.

Force Majeure Clause, Impossibility, Impracticability, Frustration of Purpose for MSPs

Managed Service Providers need to look at the contract to see if a force majeure clause exists. They need to determine what constitutes a force majeure event, the scope of the excuse for performance, notification obligations and whether or not the other party has an obligation to mitigate. Without a force majeure clause, Managed Service Providers need to build a defense if their performance is impossible, impracticable or frustrates the purpose for the underlying agreement.

Limitation of Liability - the original LOL but nothing to laugh about

Limitation of liability clauses seem to be the magic bullet on first blush, especially if you are concerned with cyber security liability as a Managed Service Provider.  MSPs should be aware that this language is more art than science.

Master Service Agreement pt 2

Dig deep into the terms and conditions of Master Service Agreements for Managed Service Providers.

Master Service Agreements pt 1

Not all Master Service Agreement templates are created equal nor should you just buy an 'off the shelf' template for your Managed Service Provider.  You should approach this important agreement understanding the purpose behind the agreement and fostering the relationship you are trying to create with your customer.

Engage your key MSP employees by giving them the right to purchase in the event you pass away.

Many MSPs have a key employee, i.e. lead technology engineer, that is willing to work for the owner but is not so willing to work for the owner's spouse.  A one-sided buy - sell agreement allows for the owner to give the key employee rights to purchase the business should the owner pass away, become disabled or other triggering events.  The agreement can be structured so as to allow the owner to freely sell to others and have the agreement only effective when a triggering event occurs.  What a great gift the owner has provided to his surviving family members - predictability in the sale of the MSP, to the employee and to the business.

Managed Service Providers or MSPs need to build to work on their defense

MSPs normally work on offense.  It is always "GROW THE TOP LINE REVENUE NUMBERS."   Little time is spent on building the defense.  Offense is not the only determining factor for success.  Defense will win championships.  Would you ever consider building a home where 3 exterior walls were 10 feet high and the 4th wall was only 2 feet high?  Listen in if you are an MSP owner and request the self-evaluation.

Right of First Offer or Right of First Refusal

It is not uncommon for Managed Service Providers or MSPs to be owned by multiple parties.  Normally, we see a technical person partner with a marketing and sales oriented individual.  They should have a buy - sell agreement.  Should it contain a "right of first refusal" or a "right of first offer?"  In today's MSP merger-mania environment, a right of first offer is probably the more fair method of resolving ownership succession.