In this episode of the Shoot the Moon podcast, Matt Lockhart and Ryan Barnett discuss the key questions buyers ask when considering acquiring an IT services firm.
In this episode of the Shoot the Moon podcast, Matt Lockhart and Ryan Barnett discuss the key questions buyers ask when considering acquiring an IT services firm. The discussion provides insights for IT services business owners preparing for a potential sale, emphasizing the importance of being prepared, transparent, and able to clearly articulate the company's value proposition and growth potential. They cover critical areas including:
Strategic fit: how does this acquisition fit into the buyers service offerings? does it compliment it, fill gaps, or extend service offerings? making the buyer more valuable? market expansion?
Profitability
Flexibility on deal structure
Synergies in Processes / Platforms: What tools are in place to deliverables? Back office, front office, CRM etc...
Having financials in order: do you know your revenue, profit, margins? Tip: Having confidence in the number for the potential buyer
Leadership & Retention post-transaction: What is the seller looking for?
Go-to-Market Strategy: Assessing sales, marketing, and customer acquisition approaches
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00:00 | Matt
Hello, and welcome to the Shoot the Moon podcast from Revenue Rocket. We are the world’s premier M&A and growth strategists for IT services firms worldwide. I’m joined by my partner, Ryan Barnett. We’re filling the chair as our other partner, Mike Harvath, is touring the world right now.
00:30 | Ryan
It’s going great. While Mike’s away, we spent time digging into our data—and realized just how many conversations we have. Over the last year we’ve had thousands (many of them long) with IT services M&A buyers and sellers: intros, first meetings, and deep dives. Today we’re reflecting on real questions buyers ask when buying IT services firms—things sellers should be ready for.
01:32 | Ryan
To start, when sellers go to market, why are these questions so important?
01:45 | Matt
Thanks, Ryan—and kudos to you for becoming our resident AI power user. Using AI to surface themes has been hugely valuable. What we’re sharing are common buyer questions that drive: (1) go/no-go decisions on an acquisition, (2) assessment of enterprise value, (3) deal terms and retention planning, and (4) early thinking on post-merger integration. Knowing these themes lets sellers prepare clear, credible answers and position the opportunity.
03:52 | Ryan
If you’ve listened before, you’ve heard us say deals must fit strategically, culturally, and financially. Early buyer questions focus on strategic fit—your offerings, geographic coverage, how you run the business, billing models (recurring revenue), your customers, and how you grow (organically vs. via acquisition). Matt, what guidance helps sellers answer those clearly?
04:59 | Matt
Three consistent themes:
Offerings: Does the target complement, extend, or upgrade the buyer’s current services or products?
Geography/Market: Will this expand reach (new regions, new segments, moving upmarket to enterprise)? We often see geographic fill-ins (e.g., “nationwide” MSP strategies) or international firms seeking North American presence.
Operational Synergies & Integration: Where are duplicate functions and process streamlining opportunities? Buyers gauge ease/complexity of integrating to unlock efficiencies.
07:58 | Ryan
Sellers can prep by mapping where geographies, industries, and services overlap or expand—and where you bring something net-new. Strategic fit is the foundation for that “1+1=3” story.
08:45 | Matt
Also consider whether you’re a platform investment or an add-on. Both can be great, but you’ll emphasize different aspects of strategy depending on the role.
09:25 | Ryan
Right—buyers often probe scalability as a platform vs. being an add-on. Switching gears: buyers move to financial diligence fast. After intro meetings, the next ask is, “Show me the books”—P&L, balance sheet, forecast. What do they ask first?
10:36 | Matt
First, revenue: historical growth (e.g., five-year CAGR), organic vs. acquired, mix by type (MSP, projects, resale, etc.), by geo/segment, and where growth is fastest. Then profitability: overall net income but especially gross margin—how it benchmarks to peers and by service line. Buyers will either value your margin discipline or see room to improve.
From there, discussion turns to structure preferences (cash vs. equity roll, earn-out, seller note) and how that tracks to market comps.
14:22 | Ryan
Sellers need to know their numbers—you’d be surprised how often CEOs don’t. Expect specifics like: “Break down gross margin by service type,” and “How do you handle working-capital adjustments at closing?” Your answers drive confidence—and valuation.
16:03 | Matt
Have the story behind the numbers ready. Example: you launched a new service last year; margins are lower while you seed adoption or price aggressively. If you articulate the ramp and why it improves, buyers can get excited instead of concerned.
17:35 | Ryan
Next bucket: operations and integration. Buyers will ask about systems and processes. What themes come up?
18:06 | Matt
They’re assessing synergies, management approach, and tooling alignment across back office (ERP, CRM, PSA) and delivery (e.g., Microsoft vs. open-source stacks). Many founder-led firms run NetSuite; buyers note whether that matches their estate—or how hard the conversion is. They’ll ask about process maturity, org design, KPIs, and whether you’ve done prior acquisitions (and how you integrated them). Integration experience is a plus.
20:51 | Ryan
Operational maturity shows up in valuation. Documented processes backed by tools = confidence—especially if you’re a platform. Quick one: are mismatched tools (e.g., Kaseya vs. ConnectWise) deal breakers?
21:54 | Matt
Rarely. Tools are tools. Consistent processes and disciplined use of tools matter more. Matching platforms is a plus, not a prerequisite.
23:00 | Ryan
The next big area—every deal gets here fast—is leadership intentions and retention. Key employees drive IT services value.
23:33 | Matt
(crosstalk)
23:34 | Ryan
What questions do buyers ask around leadership and retention?
23:39 | Matt
First: What does the seller want? Sell out quickly? Sell in and stay? If selling in, what role best fits and makes the buyer better? Many buyers want sellers to roll equity—shared upside signals partnership. Beyond owners, buyers assess the management team: who’s critical, who’s duplicative, and what the retention plan looks like.
26:41 | Matt
I think one—
26:42 | Ryan
—key takeaway for sellers: have your plan. If you’re leaving, buyers need confidence the team can execute without you. Expect deep questions on org structure and capabilities. Side note: keep employee names and customer lists blinded until you’re far into diligence with one finalist.
28:27 | Matt
On go-to-market, buyers want a real growth engine. Expect: “How do you acquire new customers?” Then: how many, which channels, marketing-to-sales handoffs, BDR vs. AM coverage, retention and expansion motions, attach of new services/technologies, sales velocity, win rates—plus evidence in the data. This is central to maximizing valuation.
32:25 | Ryan
You’ll also get competitive landscape questions: who you face, how you’re different, and details on your customer base (industry, size, revenue by account, products/services sold). That story needs to line up with the strategic-fit thesis.
33:19 | Matt
Another common one: customer churn.
33:23 | Ryan
Customer loss, or…?
33:25 | Matt
Customer churn—it happens. Everyone has some level of customer loss, pause, or spend decrease. Be ready to explain the why and what you did about it. It shows command of your business and market.
33:54 | Ryan
That covers a lot. Any other general areas?
34:07 | Matt
This is grounded in a mountain of Revenue Rocket data across tech-enabled services buyers assessing targets. Super helpful themes for sellers to prep.
34:40 | Ryan
Quick summary: align your strategy to a buyer’s thesis; be transparent and precise on revenue sources and margins; show operational maturity and integration readiness; be clear on your transition role and your team’s retention; highlight untapped cross-sell and market opportunities; and be ready to discuss your market and competitors.
35:48 | Matt
And be prepared to highlight opportunities within the existing customer base—that’s where a lot of upside lives.
35:49 | Ryan
Exactly.
36:31 | Matt
As our fearless leader likes to say, we’ll tie a ribbon on it. Thanks for joining us. Mike will be back soon, so please come back for more episodes of the Shoot the Moon podcast. Have a great week—we’ll see you next time.