Nick Akers·August 14, 2023

How to Buy an MSP Business | Nick Akers Interview

Nick Akers is a mid-career operator with a background spanning a venture-backed materials science startup (raised ~$25M, exited to Emerson Electric), a defense/aerospace engineering firm, and six-plus years as de facto president of his father-in-law's chemical manufacturing company, where he professionalized the business and doubled its size before a difficult family-dynamics departure. After failing to place a large chemical-sector deal with PE firms over 18 months, he joined Nova Stone Capital Advisors — a Swiss-based search accelerator — as their first U.S. searcher. Following a six-month false start on a specialty chemical target that declined his LOI at ~7x, Nick broadened his thesis and in May 2023 closed the acquisition of STL Communications, a 41-employee managed service provider in St. Louis specializing in unified communications as a service (UCaaS) and founded in 1990. The deal was sourced through a serendipitous networking lunch with a local broker and solved a clear succession problem for a retirement-age owner. Nick entered with a working capital cushion and a line of credit, immediately focused on cash flow stability, and within two months was already pursuing bolt-on acquisitions in the fragmented lower MSP market. His core thesis is that culture and customer service — not technical domain expertise — are the real product, and early indicators such as retaining a key employee who had already resigned suggest the approach is taking hold.

Deal facts

sde ebitda: EBITDA in the $2m-$5m range (Nova Stone target range; described as falling 'in the sweet spot')
financing structure: Traditional search fund structure via Nova Stone Capital Advisors (Swiss-based search accelerator); SBA or specific financing terms not disclosed
notes: Founded 1990; 41 employees at close; working capital infusion funded at close plus a line of credit established; closed May 5, 2023; seller did not want PE — wanted to retire; deal sourced through a networking lunch with a local business broker in St. Louis

Why this business

Nick was attracted to STL Communications because it fit the Nova Stone EBITDA range ($2-5M), operated in the high-growth UCaaS segment of the MSP market (15% CAGR in North America), had recurring revenue and sticky customer relationships, and solved a clear succession problem for a retirement-age owner. He also saw it as a platform for bolt-on acquisitions given the highly fragmented lower end of the MSP market. Philosophically, he viewed it as a service business — 'whatever we're selling is just the widget behind' excellent customer service — which matched his cross-industry leadership style.

What's working

Recurring, sticky revenue from unified communications as a service (UCaaS) contracts with business customers
Company's differentiation through personalized service — customers have an escalation list including the owner's cell phone — versus large competitors who route everything through ticketing systems
Culture-first leadership approach: a key employee who gave notice in week two was persuaded to stay after Nick addressed their concerns, and is now 'shot out of a cannon doing an unbelievable job'
Working capital infusion at close and a line of credit have kept the business healthy and enabled early reinvestments (e.g., fleet of company cars replacing costly rental car reimbursements)
Nova Stone board and personally recruited board members providing accountability and strategic support
Active pipeline of bolt-on acquisition targets in the fragmented lower end of the MSP market, including a near-LOI deal at ~$1M revenue / ~$300K SDE

What's hard

Key employee resignation in weeks two or three of ownership — a senior person had already accepted another offer before learning of the sale; Nick managed to retain them through direct conversation
The search itself had a painful six-month detour on a specialty chemical deal (close to 7x multiple, ~$7M EBITDA target) that fell through after extensive diligence and relationship-building, wasting roughly six months
Broadening the search thesis away from specialty chemicals was necessary when multiples in that sector exceeded what the search fund model could support (5x to 10x+)
Traditional search fund economics cap ownership at 25%, which is significantly lower than self-funded searchers who may own 80-100%; this required deliberate comfort with the tradeoff
The emotional toll of a closing process — being the single point of contact absorbing stress from broker, seller, legal, and investors simultaneously — and the temptation to use deal team members as personal emotional support

Notable quotes

My motivation to do a search and ultimately be the person in charge was to prove that a certain type of culture — that is really an employee first type mentality — will work.

The most important thing I need to do for the company right now is to protect it and at least the way I think about that is making sure the cash flow is working so that we can operate the business, pay our folks, pay our vendors, and just keep functioning.

What you are doing is you are selling the customer service and our chemicals just come along with that — and I look at this business the same way. It's a service business right. You're selling this essentially software as a service to your customers and if you're not delivering that excellent customer experience, I just don't think you're going to be successful in the long run.

I would suggest you need to start acting as the CEO during that phase and demonstrating that you can handle the stress of a close — don't rely on your deal team as your own personal support mechanism.