An Easy Way to Immediately Add $315,000 to the Valuation of your MSP

MSP acquisitions are hot. If you own and operate an MSP, you probably know someone who has sold their MSP, or receive calls and emails weekly from potential acquisition partners.

Prior to founding Kalutasan Staffing Solutions, I owned and operated an award-winning MSP for more than 20 years, which resulted in a highly profitable exit in 2021. MSP valuations are based on a multiple of the EBITDA in your business. Leading up to the sale of our MSP, we wanted to maximize our EBITDA so that we could achieve the highest sale price possible when selling. We did so using the trick that I share with you below.

Increasing your EBITDA

There are three ways that you can increase your EBITDA – you can sell more, raise your prices, or cut your costs. We all know that MRR sales are the lifeblood of a great MSP. However, most MSPs don’t have a sales engine that produces predictable results, and any gains are easily lost through client attrition. Most MSPs have raised their rates to counteract the effects of inflation in tools costs, insurance, utilities, and other business expenses. Unfortunately, these price increases most likely didn’t increase your EBITDA, but rather preserved it, having negated the effects of inflation. Cutting costs is a great way to increase your EBITDA, but can be difficult to do with rising prices. There is one EASY way to cut costs…hire overseas!

Did you know that when you hire talented tech staff from the Philippines, you save more than 50% in salary, taxes, insurance, and other labor costs? The average savings results in approximately $45,000 per year, per tech. This is an instant increase in valuation of $315,000, per employee!

Staffing in the Philippines

That’s why I utilized Filipino resources in my MSP! What I learned along the way is that tech talent from the Philippines was perfect for our business. English is the official business language in the Philippines, which facilitated concise, clear communication. In addition, the culture, work ethic, and values in the Philippines perfectly align with western business practices. The Philippines has a population of more than 100 million, and consistently delivers a deep bench of qualified techs eager to work. This allowed us to choose the techs from a pool of qualified applicants, allowing us to profitably deliver services, reduce burnout, and increase our profitability.

Most MSPs would like to leverage the benefits of overseas labor, but don’t think it’s right for them, don’t know how to get started, and don’t have the time to figure out the complex labor laws associated with overseas employment.

That’s Where We Come In

Kalutasan is an outsourced staffing agency that specializes in providing high quality tech talent for MSPs. Consulting with US and Filipino attorneys, we figured out the legal side of the business, so you don’t have to! Our talent acquisition process consistently delivers high quality candidates, giving you a wide range of applicants to choose from. Our integration consulting services quickly incorporates your new resource into your team, and assures longevity in your MSP.