How MSPs Are Actually Valued
Managed services valuation is one of the most spread-out ranges I see in lower-middle-market M&A. Two MSPs with identical $2M EBITDA can trade $8M apart depending on MRR mix, security attach, vertical concentration, and tooling discipline. A buyer is not paying for last year's P&L — they're paying for the durability of the recurring book.
The Three Tiers Buyers Actually Use
Sub-$3M EBITDA (most independent MSPs):4-9x EBITDA. The wide range reflects quality. A break-fix-heavy shop with project revenue spikes lands at 4-5x. A clean managed-services book with 65%+ MRR, documented runbooks, and no founder dependency lands at 7-9x. The PE roll-ups — New Charter Technologies, Evergreen Services Group, Thrive, Right of Boom — have public buy-boxes around this range and they will not stretch for messy financials.
$3-15M EBITDA platform candidates: 6-11x EBITDA. This is where you stop being an add-on and start being a platform investment. Buyers like ConnectWise (TA Associates), Pax8, and the various sponsored consolidators compete here. Multiples reflect the strategic value of geography, vertical specialization, and team density.
Premium platforms with cybersecurity stack and 70%+ MRR:10-14x EBITDA. To get here you need a real managed-security offering — SentinelOne, Huntress, or CrowdStrike integrated into your stack with documented SOC processes — plus disciplined client onboarding, audited gross retention above 95%, and net revenue retention above 105%. These are the deals that make headlines.
The Metrics That Move Multiples
MRR as a percentage of total revenue.This is the single most important number on a buyer's diligence checklist. Below 50% MRR and you're a project shop with a recurring tail. Above 70% and you're a recurring business with project upside. The multiple difference between those two stories is enormous.
Per-seat MRR.Buyers benchmark every MSP against the Service Leadership Index data — the best operators run $200-300+ per seat per month all-in. If you're billing $90/seat on a Microsoft 365 reseller motion, the buyer assumes you'll get squeezed by direct competition and prices accordingly.
Gross logo retention.The institutional bar is 90%+ annually. Below 85% and buyers question whether your churn is structural or product-related. Above 95% with documented QBRs and net promoter data, you're defensibly sticky and the multiple reflects it.
Security stack depth. EDR, MDR, identity, email security, backup, and a real 24x7 SOC (whether in-house or partnered with Huntress / Arctic Wolf / Blackpoint) collectively create a moat. MSPs running just RMM + AV with no detection-and-response capability are getting disqualified from the premium tier entirely.
Vertical specialization.A generalist MSP serving 200 random SMBs trades worse than a specialist serving 80 dental practices, 60 law firms, or 50 manufacturing clients. The specialist has pricing power, repeatable onboarding, and lower CAC — all things the buyer is underwriting.
What Drags Multiples Down
Single-tech-stack lock-in. All-Datto or all-Kaseya MSPs trade at a discount because the buyer inherits vendor concentration risk. Multi-vendor stacks (ConnectWise + N-able or NinjaOne + Auvik) signal operational maturity.
Founder-as-technician. If the owner is still the senior engineer answering tier-3 escalations, the buyer is paying for an asset that walks out at close. Practices with a real service-delivery manager and documented escalation paths trade meaningfully higher.
Client concentration. Top 3 clients above 25% of revenue is a yellow flag. Above 40% and buyers either kill the deal or apply a 1-2 turn discount with significant escrow.
Hardware reseller revenue.If 30%+ of revenue is pass-through hardware sales, the buyer strips that revenue out of the multiple calculation entirely — they're only paying for managed-services EBITDA. Make sure your books separate the two cleanly.
Public Comps and Active Buyers
On the public side, ScanSource (SCSC) and CDW (CDW) trade in the 8-13x EBITDA range as distribution-heavy comps. They're not direct comps for a managed-services-pure MSP, but they anchor the lower bound of the public market.
On the private side, the active acquirers right now are New Charter Technologies, Evergreen Services Group, Thrive, Right of Boom, the various Eden Data / Pax8-adjacent platforms, plus dozens of sponsored regional roll-ups. ConnectWise (TA Associates) is also acquiring. This is a buyer's market for sellers under $1M EBITDA and a seller's market for clean platforms above $5M EBITDA.