Why I Won't Sell to Private Equity (and What That Means for You)

A few years ago a private equity firm bought one of the larger IT companies in West Texas. Then another. Then a third. Watch the local market closely enough and you see the pattern: a recognizable owner-operator gets a quiet offer, takes it, and after a brief transition the company name stays the same but everything underneath changes.

The owner you used to call doesn’t pick up anymore. The engineer you knew by name has been “reassigned to operations.” Your account got moved to a tier with longer response times. The price went up. The contract got tighter. The work got worse.

This isn’t malice. It’s the model.

What the rollup actually does

The pitch private equity makes to MSP owners is straightforward: sell us your company at a 7-10x EBITDA multiple, stay on for two years to facilitate the transition, then retire. For a 50-year-old founder with no exit strategy, the math is hard to argue with.

The model on the buyer’s side is also straightforward. The PE firm is buying revenue with a plan to:

1. Cut costs (consolidate billing, payroll, helpdesk, dispatch into one shared service center, often in Mexico or the Philippines).
2. Standardize delivery (move customers off bespoke environments onto a common stack, regardless of whether that fits the customer).
3. Push price (annual increases above inflation, contract terms that lock customers in).
4. Bolt on more acquisitions (each new shop brings revenue that gets squeezed the same way).
5. Sell the bigger company in 5-7 years to a larger PE fund or strategic acquirer at a higher multiple.

This works financially. The math really does pencil out for the investor. It just stops working for the customer somewhere around step 2.

What customers experience

The pattern, watched closely over the years, is consistent:

• Year zero: sale closes. Customer hears nothing or hears a polite welcome letter. Pricing and service stay the same.
• Year one: original owner is “still around but stepping back.” Some senior engineers leave for boutique competitors. Response times slip a little. Some tooling gets standardized.
• Year two: original owner exits formally. Helpdesk moves offshore. Tier structure tightens. First annual price increase notable enough to question.
• Year three: the company barely resembles what was bought. Customers who were promised continuity are talking to a queue. Mid-tier customers churn. The PE firm replaces them with two more acquisitions.
• Year four-five: the bigger entity gets sold to the next-bigger PE firm, and the cycle restarts.

There are exceptions. There are PE firms that do this thoughtfully. They are rare.

Why we’re staying independent

I’m not sentimental about this. There are real reasons to take an offer if one comes — capital for growth, exit for the owner, scale that funds better tooling. I’m not trying to romanticize the small shop.

What I will say is that the businesses we serve in Lubbock, Midland, Odessa, and the rest of West Texas need an IT company where decisions are still made locally. When a tornado warning comes through and we send the team home early, that’s a 30-second conversation, not a Slack thread with a corporate ops team. When a customer calls with something that doesn’t fit a standard ticket category, we just handle it. When a longstanding client hits a rough quarter and asks for some flexibility on terms, we say yes.

Those are the things that don’t survive the rollup. Not because PE owners are bad people; because the model doesn’t reward them.

What this means as a customer

A few practical commitments:

• Same crew, same office. We aren’t planning to grow by acquisition or get acquired. The team you talk to next year is the team you talk to this year.
• Owner answers. I’m in the office every day. Direct number for owner-tier clients. Call (806) 370-4700 — that’s the same number it has been.
• Prices change with cost, not with cap-table pressure. Our pricing changes when our underlying cost structure changes. Not because a board is demanding revenue per customer go up.
• Contracts that you can leave. Month-to-month after the first 90 days. If we stop deserving the relationship, you don’t have to fight the contract to find a new vendor.

The harder truth

The local-IT-company-still-owned-by-the-owner is becoming rare. Not because customers don’t value it; because the financial pressure on owners is real and the offers are good. Most don’t say no.

We’re saying no, for now and on the foreseeable horizon. If that matters to you, that’s part of why we’re a fit for some businesses and not others.

If you want to start a relationship with a small West Texas IT company that intends to still be small and West Texas in five years, the free IT Blueprint Assessment is the first step. Walk-through, written punch list, flat-rate proposal. No follow-up calls unless you want them.

— Philip Robb Owner, Robb Technology Group, LLC