Matt and Ryan from Revenue Rocket break down the concept of “selling in” - partnering with growth capital to scale your IT services business - versus “selling out.” They explore how founder-led companies can leverage private equity or family office investments to unlock their next stage of growth without giving up control or purpose. From the second bite of the apple to choosing the right platform partner, they share insights on when, why, and how to align ambition with the right capital.
In this episode, Matt and Ryan break down the concept of “selling in” - partnering with growth capital to scale your IT services business - versus “selling out.” They explore how founder-led companies can leverage private equity or family office investments to unlock their next stage of growth without giving up control or purpose. From the second bite of the apple to choosing the right platform partner, they share insights on when, why, and how to align ambition with the right capital.
Key Takeaways:
Quote:
“Oftentimes people make more money in the second bite of the apple than they did the first.” — Matt Lockhart
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Matt:
Welcome to the Shoot the Moon podcast, brought to you by Revenue Rocket. I’m Matt Lockhart, one of the partners here. If you’re new to the podcast, Revenue Rocket is the premier growth strategist and M&A advisor to the IT services marketplace. We’re the M&A people. With me today is Ryan Barnett, another partner. How are you doing, Ryan?
Ryan:
I am doing great, Matt—thank you for having me on the podcast today. Every week we try to talk about topics we see in client life and around IT services and M&A. We’ve got another good one: “Where growth capital meets ambition.” Matt, you coined the concept of “selling in” to a business, and that’s core to today’s discussion: What are the trade-offs between growing a company organically and growing it with growth capital? To start, what is growth capital in this context, and what is the “selling in” environment firms use to accelerate growth?
Matt:
Absolutely. Let’s define a couple of terms we’ve been using—“selling out” vs. “selling in.” Selling out is when you sell your business and walk away—transitioning to other people and moving on to retirement, a new venture, travel, whatever that may be. Selling in is becoming part of a new company backed by private equity or other growth capital. You might be the platform for a NewCo, so at the beginning it may look exactly like your old company—or you could join another firm that’s already backed. You’re a piece of a new puzzle because you see an opportunity to keep growing and build additional value for your firm, your employees, and yourself. And growth capital is simply money—partners like private equity firms, family offices, and other financing providers deploying funds into areas they want to invest in. A common example today is MSP platforms and the amount of investment in that space.
Ryan:
We’re seeing many investors in the market today. They want to partner with local operators, understand their skills and markets, and put capital to work. They can be a great partner by your side—infusing capital and vitality into your efforts. If you’re selling in, it’s often with a company investing in growth and in your shared future.
Matt:
We’re seeing more founder-led businesses that have grown to a point but recognize the difficulty of scaling further—especially with headwinds after the Silicon Valley Bank situation and a tougher economy. If you’re a $25–50M organization aiming for $100–150M or more, you may need acquisitions or faster capability evolution. On the other side, a decade ago many investors didn’t fully appreciate IT services; today, many have built dedicated theses around tech-enabled services. The opportunity for these situations to come together is exciting.
Ryan:
There’s not a day that goes by that we don’t get a call from a private equity firm looking to invest in this space. Recurring revenue, resilient demand, and strong cash flow all help. As MSPs, CSPs, and application developers add managed services, investors have become more knowledgeable, and consolidation follows. For someone new to this, how do they get started or learn more—any examples or first steps?
Matt:
Honestly, the first step is to talk to us—or another advisor with specialty in this space—and talk to peers who’ve been through it. You’ll begin to contextualize what it means to be a platform vs. an add-on, what it means not to be the sole boss anymore, and to work with an investor partner and a board. You’ll also learn what good growth capital looks like—firms with deep operating partners who help with strategy and organizational improvements—versus deal-by-deal shops without domain expertise that lean heavily on credit. Once you decide to jump in, there will be a lot of interest in talking to you.
Ryan:
If you’re operating an IT services firm and wondering, “Do I buy another firm? Do a tuck-in? Keep going organically?”—the answer might be “yes” to both. The real question becomes: do you want additional investment to radically grow? Demand has never been stronger. Founders can take some chips off the table and stop wearing every hat—focus on the one thing you do best: sales, marketing, delivery, product, or AI/automation.
Matt:
Great point. We often see technical founder-led businesses that have scaled well—hired sales leaders, built finance functions—but the founder’s passion is the technology. We had a case around a $40–50M firm where the founder sold in to a platform not much bigger than his, which freed him to create the next generation of value through his technical expertise—he didn’t need to be CEO anymore. In other scenarios, if you’re a strong leader eager to scale, this path lets you lead at a bigger, faster level. Some founders even move into ongoing M&A strategy roles, meeting the next generation of partners. It can be re-energizing.
Ryan:
There’s also the “second bite at the apple.” Could you explain what we mean by that, and what it means for value creation for a seller taking this path?
Matt:
The first bite is when a buyer takes, in most cases, a controlling interest and you get paid—for example, your business is worth $50M and someone buys 60%. You then roll your remaining equity (say 40%) into the new platform. As that platform grows—often faster than you could on your own—it eventually sells. That sale is your second bite at the apple. It’s not uncommon to make more on the second bite than the first. Partnering with the right growth capital provider can create a distinct financial opportunity while you scale and have fun building at pace.
Ryan:
Right—and that $50M starting valuation can grow as the business scales. If you’re a $50M-revenue company that becomes $100M with rising EBITDA, larger buyers pay larger outcomes—and you participate via your rollover. As a seller, how do you evaluate the platform company you’re betting on?
Matt:
Build your own team—know what matters to your executives, your culture, your strategy, and your goals. Then assess potential partners against those. Trust (competency and character) is essential to ensure cultural alignment and leadership principles. Examine the growth strategy: how you’ll get there, how acquisitions factor in, whether your partner has committed funds, and their track record in the space. Consider cultural, strategic, and financial fit.
Ryan:
What about reasons a founder might not take this path? Sometimes someone with healthy EBITDA wonders if the return is worth it when deals are based on EBITDA multiples. When might it make sense to keep running as-is instead of joining forces and hitting the gas?
Matt:
There’s the personal side—do you want to go faster and work with partners? That’s exciting, but it’s change. On the business side, you need the right people and plan—and a reasonable chance of achieving it. If you have a strong growth forecast and high confidence it’s coming in, it might be smart to wait; you can keep growing value at a good clip and revisit timing later. It’s a mix of your goals and market timing—some moments are better than others to start the process.
Ryan:
Last question: if you “sell in,” is it mandatory to do acquisitions from that platform? Do you immediately need a big M&A pipeline?
Matt:
Most growth partners recognize that, within a typical hold period, inorganic growth is usually part of reaching scale—so buy-and-build is common. That said, family offices may have longer horizons and less emphasis on acquisitions, allowing a longer glide path. In most cases we see both: improved organic growth and consistent inorganic expansion.
Ryan:
Even if acquisitions aren’t immediate, you can still grow significantly with the investment and operating support from the right partner—focus, talent, and resources can materially boost organic growth. Founders can often grow well beyond where they are today, take chips off the table, and keep doing what they love.
Matt:
Thanks, Ryan. Quick wrap: we’ll soon start discussions about artificial intelligence and its impact on tech-enabled services—a timely topic. Also, for those who saw last night’s incredible northern lights, hope you enjoyed the show. If you’ve got topics you want covered on Shoot the Moon, send a note to info@revenuerocket.com. We’ll tie a ribbon on it, and look forward to having Mike back next week. Thanks, everybody.