What F12.net has learned from 20 years and 15+ acquisitions

Robert Dutt:  Hello and welcome to In the Channel from ChannelBuzz.ca, bringing news and information to the Canadian IT channel community for the last 16 years. I’m Robert Dutt, editor of ChannelBuzz.ca, and your host for the show.

If you go to F12.net right now — one of Canada’s largest managed service providers — you’ll find something you don’t see on most MSP websites. A page that says “Looking to sell? Let’s talk!” And it’s not vague. It lists exactly what they’re looking for and exactly what a seller gets. That kind of openness tells you something. It tells you that for F12, M&A isn’t opportunistic. It’s a core part of how they’ve grown from an Alberta basement operation in 1994 to a national MSP with over 500 employees and more than 15 acquisitions under their belt.

My guests today are Alex Webb, founder and CEO of F12.net, and Leanne Yeatman, Chief of Staff, who’s been deeply involved in the company’s acquisition strategy and adds some valuable perspective throughout our conversation. We cover the full picture here — how F12 decides what to buy and what to walk away from, what integration actually looks like after the deal closes, and what MSP owners on the other side of the table need to know if they’re thinking about selling someday. Alex also shares what it was like to recently go through a recapitalization of his own company, putting him on both sides of the M&A equation.

Let’s get right into it. My chat with Alex Webb and Leanne Yeatman.

Robert Dutt:  Alex, Leanne, thanks for joining us.

Alex Webb: Thanks.

Leanne Yeatman: Thank you for having us.

Robert Dutt:  Not every MSP has a “looking to sell” page on their website — much less one that is as prescriptive as listing what you’re looking for and what a potential seller gets. Pretty deliberate signal. When did M&A go from something that happened at F12 — an opportunity that came along — to something that became a core part of how you grow and something that you approach intentionally?

Alex Webb: Going back to the memory here — I would say that transition happened right around 2015. Prior to that, we did two acquisitions and they were more circumstantial, opportunistic, presented themselves more than us actually going out and seeking them out. But that shifted when we wanted to expand into a new region that we targeted. That region was Ontario. We were Alberta-based in 2014 and we had a plan to expand into two more provinces — Ontario being first, then BC being second. So I would say that was the date.

Robert Dutt:  Your first acquisition was CPU Technologies, way back in 2006 — 20 years ago. What was that experience like, and how much of what you do now was shaped by what you learned, for the good and the bad, doing it for the first time?

Alex Webb: I’ll actually let Leanne go first. She played a big role in that acquisition.

Leanne Yeatman: Going back a long time in history — that was our first transaction. It was different in the sense that we had some outside influence. One of our partners at the time, Wayne Scrivens, played a big role in coaching and teaching us what to look for and how to go through that process. I would say it was foundational in that it sparked this desire to do it more and to recognize that this can be a huge part of our growth story. It’s not the only piece of the journey, of course, but it definitely was a foundational moment for us. And while no two transactions are the same, there are obviously similarities. The more you do it, the more you look back and remember the specific things that went well and the things that maybe didn’t go so well — that you would do differently if given another shot.

I remember the details very clearly still to this day.

What we learned in that early phase of the CPU acquisition was that when you don’t have the relationships, it’s very hard to convert clients, because they don’t trust you, they don’t know you, they don’t believe you. You have to work really hard to build that trust. That was the biggest education we had: that integration and converting clients was going to be way harder than we thought.

Robert Dutt:  Obviously it didn’t scare you off, because you’ve done 15 or so acquisitions over those last 20 years. Is there a rhythm to it? Is it a “you’re always looking” kind of thing, or do you find it comes in waves?

Alex Webb: I would say waves. We found it a little easier to have a few acquisitions brought in and do that integration work together, because you’re usually assembling teams, and it tends to work a little better than fully integrating one and then starting another. You can do a lot of things in tandem, because you’re generally ripping and tearing not only at their systems but at your own — learning as you go all of the inadequacies in your own systems that need to be redeveloped. That work has to happen while you’re doing integration. So we just found it a little easier to do them in waves.

Robert Dutt:  The technology tradition of batching — it kind of makes sense from that regard too. Your website lists the criteria you look for: north of $5 million in revenue, low churn, a majority of managed services, healthy EBITDA. Those are the table stakes. What’s the stuff that’s not on the website? What makes you lean in on a company that maybe looks more marginal on paper but gives you a good vibe — or conversely, walk away from one that checks all the boxes but just leaves you with a “no” feeling?

Alex Webb: Culture plays a big role. The depth in the organization — how distributed is the effort? Does it all sit on one or two people? Or, even if they’re smaller, have they found ways to distribute the workload across the team?

The test of resiliency in the organization matters too. Sometimes longevity brings a certain amount of resilience to a team and a culture. Sometimes experience doing their own expansions or acquisitions brings some of that. That’s important, because when you go through integration, things change — and not just for one entity. A wise person in the industry once explained it to us as: there are two cultures, and both cultures change and become one going forward. The pressure integration puts on both teams is significant. So you really want to look for a team that’s going to be able to weather that storm — one that has a good amount of trust built up with their leadership and with each other.

Robert Dutt:  How much of the decision comes down to the owner? Their personality, their readiness to move, what they want their life to look like after the acquisition?

Alex Webb: That’s a big one. The motivation for why they want to do it is a key ingredient. We try to get to that early, because in M&A, some owners might feel like they can get a little more value out of the business if they portray that they’re staying — but it’s actually traumatic on the business when the alignment is wrong. So we work really hard up front to figure out what’s actually going on. And it’s okay if you want to transition out, or if you want to stay and we work a role around you. Those are very important ingredients for a successful integration outcome.

Sometimes there’s indecision — do I want to be part of it or do I want to leave? We just help them with that. We make it okay either way. F12 is a good home for their people and their clients, so they don’t have to worry about that part. We can concentrate our efforts on the outcome the owner actually wants.

Robert Dutt:  To Leanne’s point about two cultures becoming one — you close the deal, it’s Monday morning. I presume champagne pops, but that’s just my vision of how these things work. What does that first week actually look like for the employees and the clients of the company you just acquired?

Alex Webb: If you’ve done it right, it doesn’t feel any different. I know that’s a bizarre answer, but I think that’s what people build up in their minds — that day one, a bunch of things are going to change. Balloons and fanfare. And really you just wake up Monday morning and, you know what, we need to collect some money, answer the phone, go to the client site. All of the things just keep happening. The only difference is generally that there’s a little more money in your bank account than there was the day before — and that’s significantly the only difference.

That’s a bit of an out-of-body experience for most owners who’ve never done it. The real work starts more like two or three weeks in. You want things to be business-as-usual for a beat, and then you’re working through the integration plan and executing against it. But that doesn’t happen on Monday morning.

Robert Dutt:  After 15 or more acquisitions, what have you learned about that integration process? How does the playbook look different now than it did for deal three or four — once you’d realized you were going to do this more than once, but before it had become the muscle memory it is today?

Alex Webb: I can say for sure what we don’t do: don’t call it a merger anymore. That’s the tendency with people who are new to it — “we’re merging, we’re going to take the best of both businesses.” That communication is false, because inevitably an acquisition is going to become one entity, and you’re not going to change the processes of the mothership too quickly. You might learn some things and adapt, but you’re not going to adopt their RMM tool or their PSA tool — not likely, because you’ve done so much work building your own. On the communication side, we’re very clear on that now. I think we presented it more like a merger in those earlier days, and it didn’t create a better outcome.

The better outcome comes when it’s highly communicative all the way through the process, so people know what’s going on and can plan accordingly.

Leanne Yeatman: I’d add two things. One — you can’t outsource the integration work. You can use outside parties to support it, but the leadership team needs to be present and own those pieces of integration very intently. And two — really understand the essence of the business: the things that make the culture what it is, the things that drive people’s loyalty and love for that entity. Make sure you foster those things and allow them to continue.

Robert Dutt:  What does that transition look like? When you acquire a company, they have their own name, their own culture, their own way of doing things. How do you handle that — it doesn’t sound like it’s “welcome to F12” from day one?

Alex Webb: It starts with core systems — getting the tools in place so that we have shared visibility into how the business is performing. That’s the first wave.

What we’ve discovered from a culture perspective is that you can still have your identity as a region, as a location. Just because the logo is different, that doesn’t need to change how you do things. You can still have that Friday lunch if that’s what you did. You can still have the barbecues. You could still race RC cars in the parking lot. We don’t need to have a brand above the door to enable those things — but it’s bizarre how people interpret that they’re suddenly not allowed to do them anymore. So for us, it’s about being, as Leanne said, very intentional — making sure people continue doing the things that kept that culture alive.

Then when the logo changes over, it shouldn’t feel that different other than it’s a different brand. And now there’s marketing support, sales support, and a lot of things that help that business that they didn’t have before. If you’ve done it right, you’ve added capabilities, expanded the offerings, and people can be more successful and feel more security about their future. That’s the magic. When that occurs, retention stays high — for both clients and team members.

Robert Dutt:  You mentioned that you initially started doing acquisitions to expand geographically, and a lot of your acquisitions have looked like that going across Canada. AMTRA Solutions last year looks a little different, though — that’s a capability play, adding Microsoft Cloud and AI Copilot expertise. Is what you’re looking for in an acquisition changing?

Alex Webb: It certainly is — or, maybe I should rephrase: it’s not so much changing as expanding. We’re still doing what we did on the geographic side, but we’re now adding strategic capabilities as an additional objective. For us, it’s either build it or buy it, and if it makes sense to buy it and bring that capability in, we will.

AMTRA really presented a very unique opportunity. In full transparency — when clients get larger, into that upper mid-market range of roughly 350 to 500 seats, their IT needs shift from what a traditional managed service provider does. We handle level one, level two, level three help desk, patch management, backup, infrastructure management — all of those things. But as those organizations get a little larger, the needs change. They want to bring in more advanced Microsoft capabilities, and we would either lose those clients to larger enterprise providers, or bring those capabilities in-house. AMTRA presented that opportunity. It’s been incredibly successful, and we’ve been able to bring those technologies to our upper-end clients in a way that’s really working.

Robert Dutt:  Without tipping your hand on anything specific — where are the gaps? Is the next chapter more geography, more capability, or are you looking at different frontiers altogether?

Alex Webb: For us, the primary frontier is still geographic expansion — into Central Canada and Eastern Canada. That’s still on the to-do list. We also have our eye on more advanced security capabilities, because that’s forever changing and moving more toward the AI front. And we’re not ruling out ERP — the things I like to see are capabilities that all of our clients could utilize and benefit from. When we look at ERP applications, Dynamics 365, these are technologies that the broader client base can use and benefit from, having a mid-market provider able to bring them to market at scale.

And we’re not ruling out going south of the border either. We already have clients in the U.S., and we’re starting to see opportunities in states just adjacent to Canada.

Robert Dutt:  In December, Clairvest exited and Audax came in. You’ve spent 20 years as the buyer. What was it like to be on the other side of that process — having someone evaluate your company the way you evaluate the companies you acquire?

Alex Webb: It gives me a lot of empathy for what we put our sellers through. How’s that for an answer?

It’s tiring. It was a tiring process. It’s enjoyable on a lot of fronts, and incredibly rewarding when it’s done. But the six to eight months leading up to it — that was a ton of work for the organization. We had some really good support from our banking partners, from Clairvest, and the Audax team were terrific to work with. But even with all that, a lot of work and a lot of sleepless nights.

That wasn’t our first experience on that side of the table, though. That was our third private equity transaction. We’ve been through it a few times — just enough to stay in tune with what it actually feels like.

Robert Dutt:  You’ve got the muscle memory built on both sides of the equation — that’s an interesting place to be. You mentioned how it gave you empathy for what sellers go through. Did going through it change anything about how you think about and deal with the sellers you work with? Or did it confirm what you already believed, having lived as an MSP in this industry?

Alex Webb: I think it did both. It confirmed some things, and I think we approach the process with a little more maturity now — on how we handle due diligence, data collection, and integration strategy — because every time you go through it from the other side, you learn a little more. And even when we’re not going through a full business integration, we’re still integrating at a board level, reporting to different people, going through change when you move from one private equity partner to another. I think that leveled us up a little bit and is making us stronger on the buyer side — helping sellers through the process with a little more elegance.

Robert Dutt:  A lot of MSP owners hear “private equity” and get nervous. They picture cost-cutting and layoffs. From your point of view — having been through it a few times now — what actually changes when you have an institutional capital partner? Does it speed up acquisitions? Redirect them? Put guardrails on them?

Alex Webb: Every private equity firm has their own view of what a good target looks like. So for any listeners thinking about private equity, it’s really critical that you align on strategy upfront. That becomes part of the conversation — what’s the tolerance, how does this look, who’s driving the acquisitions? These are important questions.

Generally speaking, the private equity partners we’ve worked with liked that we had M&A capability and could hit the ground running. But the types of businesses and the size of acquisitions does change as you grow and move from one partner to the next. As your business gets larger, you can take on larger transactions.

Leanne Yeatman: I’d add — knowing what you want to get out of the relationship and how you intend to continue operating the business with that new partner is critical. What we would do leading up to any transaction is decide on the top three things we were looking for in a new partner and what our vision for the organization was for the next five years — then stay focused on that through the process, to make sure you’re finding the partner that’s going to help you execute that vision. When done well, it should be a true partnership. It comes down to alignment.

Robert Dutt:  You’ve sat across the table from a lot of MSP owners who want to sell. What’s the most common disconnect between what they think their company is worth and what the market says it’s worth?

Alex Webb: I would answer that with their understanding of what should be normalized in the business and what shouldn’t — as it relates to EBITDA. The multiples vary a little, but M&A is generally a multiple of EBITDA. So what is that EBITDA, and what’s normalized?

The biggest disconnect usually comes from owners running what you might call a lifestyle business — where a lot of their personal world is woven into the business finances. When it comes to doing a transaction, it’s very tricky to determine what’s truly in the business and what isn’t, and to convince the accountants, bankers, and funders of what the real number is.

Owners who operate with a clean separation — who take a dividend and keep their personal world out of the business P&L — those are by far the easiest transactions, and you might even pay a little more for a company that runs a pure P&L. That’s one of those intrinsic things we look for.

Robert Dutt:  In your experience, how many owners who say they want to sell are actually ready to sell? And what does “not ready” look like when you’re sitting across the table?

Alex Webb: Tough to quantify, but I’d say it’s usually not a matter of “no” — it’s “not right now.” Either they’re ready and it makes sense, or they just need another year or two to readjust and get things to where they need to be.

Everybody has a number in their mind: “If I could get this number for my business, I would sell it.” But nobody wants to reveal that number, because maybe they’d get more. The reality is, people who know their number and understand the mechanics of what it’s going to take to get there tend to have more success. Maybe they’re there now, or maybe they can get there in six months.

But that’s the financial side. The mental side is probably trickier. Am I ready to let go? Am I ready to report into an entity? Am I ready to walk off into the sunset? Because sometimes the motivation for doing the transaction is fear — fear of industry change, all of the AI coming, feeling like you’re not ready to compete. That can be traumatic for an owner, because they’re doing it from a position of fear rather than from a position of opportunity for themselves and for their family.

Robert Dutt:  There’s a whole generation of MSP founders who started their businesses in the nineties and early 2000s who are approaching retirement. Is that creating a wave? And if so, does that make it a buyer’s market?

Alex Webb: I would still say it’s a seller’s market. The multiples are still high, there’s still lots of opportunity, and the industry loves businesses focused on recurring revenue with multi-year contracts — there’s real value in those businesses.

As for the retiring founders — I’d say we’re just at the beginning of that wave. I haven’t seen a meaningful change in M&A deal flow as a result of it yet. But I believe we’re at the beginning, as some of these groups hit their late fifties and early sixties and start thinking about succession. In fact, I just had one of those conversations recently.

Robert Dutt:  If I’m an MSP owner three to five years away from wanting to sell, what should I be doing right now to put myself in the best position — not just financially, but operationally and personally?

Alex Webb: I’ll let Leanne start with this one.

Leanne Yeatman: Build depth in the organization — have multiple leaders present and capable of guiding the rest of the organization through that change. On the normalization side, be clear on what’s acceptable going forward: anything personal that’s wrapped up in the business should start coming out. And third — focus on organic growth. Being able to demonstrate that the business is actively growing and has the ability to keep moving forward. Those three would be my top priorities.

Alex Webb: I would add — bring your management team into the conversation when you’re ready to start thinking about a sale. It’s a tough situation when an owner goes through the LOI and due diligence process and then reveals it to the team at the very end. Everybody feels like, “why didn’t you trust me with this earlier?” Bringing them into the dialogue — saying “here’s what I’m thinking about” — you get their input, you get buy-in, you work it together.

We do that even when we’re going into a transaction ourselves. When we were going through the Clairvest to Audax transition, we didn’t do it as a cloak-and-dagger move. It was intentional. And I think when it’s done that way, the outcome is even better.

Leanne Yeatman: Exactly. The length of the process — if you’ve been in that seat for six or eight months going through due diligence, you’ve already had the time to mentally transition yourself to what’s next. But everybody else at close is just finding out. The more people who are part of that journey earlier, the easier that first week and beyond is.

Robert Dutt:  My last question — if you could sit down with every MSP owner in Canada at one big table and tell them one thing about M&A that they probably don’t want to hear, what is it?

Alex Webb: That recurring contract revenue needs to actually be in managed services. Meaning: you’re getting compensated on a contract whether you put a person out there or not. Recurring professional services — that isn’t managed services.

This comes out in due diligence. People take that bucket of revenue and pile it in, trying to present it as managed services. But it gets found out and the deal gets discounted.

So: be really clear about your lines of business. What’s product, what’s professional services, what’s managed services. You can have recurring professional services, and if it’s contractual, you’ll get a little more for it. But if you have true managed services, isolate it — because it won’t have the same revenue volatility, and you’ll get better rewarded for it.

And if you want to improve your position, convert that recurring professional services to recurring managed services. It’s a lot of work, but we’ve successfully done that through integration for years. People are afraid to have those conversations — it goes back to the old time-and-materials, block-time days. That was the first wave. But when you look at block time and ask “why does this revenue move up and down?” — well, that’s because it’s getting classified as managed services when it isn’t.

To hammer again on normalizations: less normalizations will actually benefit you more.

Robert Dutt:  Great insights, and I appreciate you sharing what you’ve learned through 20 years of acquisitions. Good luck on the next 15.

Alex Webb: Thank you very much.

Leanne Yeatman: Get it.

Robert Dutt:  There you have it — Alex Webb and Leanne Yeatman from F12.net.

I’d like to thank Alex and Leanne for their time and for their candor. These aren’t always easy conversations to have publicly, and they were both remarkably open about what they’ve learned across 15-plus acquisitions and 30 years of building the company.

A few things that stuck with me from this conversation.

First, the shift from opportunistic to intentional. 2015 was the year that F12 decided M&A wasn’t just something that happened when a deal fell into their lap, but a deliberate growth strategy. That distinction matters, because it changes everything about how you prepare, how you evaluate, and how you integrate.

Second, the culture point. Alex and Leanne both kept coming back to the idea that the numbers can look perfect and you still walk away if the culture isn’t right. And on the flip side, integration isn’t about slapping your logo on the door — it’s about two cultures becoming one new thing. “You don’t need a brand above the door to race RC cars in the parking lot,” as Alex put it.

And third — and this is the one I think every MSP owner listening needs to sit with — Alex’s closer about recurring professional services versus managed services. If your recurring revenue is really just project work on a retainer, that gets found out in due diligence and your deal gets discounted. That’s specific, actionable, and probably uncomfortable for more than a few people listening.

If you found this episode valuable, I’d appreciate it if you’d follow or subscribe to the show. We’re on Apple Podcasts, Spotify, YouTube, and most other podcast directories. And if you’ve got a minute, a rating or a review goes a long way to helping other people in the channel find us.

Until next time, I’m Robert Dutt for ChannelBuzz.ca, and I’ll see you in the channel.