What MSP Valuations Actually Look Like... And Why the Range Is So Wide
If you ask what a managed services provider is worth, you’ll get answers ranging from 3x EBITDA to 14x. Both numbers are real. Both came from actual transactions. The gap between them explains more about how PE buyers think about IT services than any single data point.
I’ve been tracking MSP and IT services M&A data across multiple sources for our advisory practice, and the picture that emerges is worth unpacking — particularly for owners who are a few years out from a potential transaction and want to understand what drives the number they’ll eventually see on a term sheet.
Size Is the Dominant Variable
Across 120 disclosed MSP transactions analyzed by Aventis Advisors, the overall median landed at 8.9x EV/EBITDA, with a median deal size of $38.5 million. But that median obscures a distribution that is almost entirely explained by one variable: the size of the business.
The pattern is consistent across every data set I’ve reviewed. MSPs with under $1M in EBITDA typically trade at 3x to 5x, with buyers drawn mostly from individual acquirers and small strategics; these businesses tend to carry key-person risk, thin margins, and high volatility.
In the $1M to $5M EBITDA range, multiples move up to roughly 5x to 8x, and the buyer pool shifts toward small PE firms and larger MSP platforms looking for add-ons, since operations at this size are more predictable and infrastructure is more established.
Once a business crosses $5M in EBITDA, it generally commands 8x to 14x and attracts PE platform investments and large strategic acquirers, reflecting the scalable, institutional-quality profile these businesses present.
Premium exits in the 15x to 20x range do occur but are reserved for exceptional cases — businesses with strong organic growth, MSSP capability, regulated vertical depth, or national scale.
A sub-$1M EBITDA MSP is essentially a local practice. The owner is doing sales, managing techs, and probably still touching tickets. A buyer is acquiring a book of business and a person — and pricing accordingly. At $5M+ EBITDA, the business has a real NOC, documented processes, a management layer that isn’t the founder, and enough scale to serve as a platform for bolt-on acquisitions. PE firms will pay meaningfully more for that because they can buy smaller MSPs at 4–6x and immediately create value through the multiple differential.
That arbitrage is the engine of most MSP roll-ups. And it explains why PE interest in the sector has been so persistent — Drake Star tracked over 100 MSP deals per quarter in early 2025, and the pace hasn’t slowed.
What Moves the Needle Beyond Size
Size gets you in the range. Everything else determines where you land within it. The factors PE buyers scrutinize most aggressively in MSP diligence are surprisingly specific:
Monthly recurring revenue composition. This is the single biggest valuation lever after size. MSPs with over 70% of revenue from managed services contracts — per-seat, per-endpoint monthly bundles — command the top of the range. Project revenue is acceptable in the 15–25% range if it’s tied to existing managed services clients. Break-fix and time-and-materials work gets discounted hard. I’ve seen buyers effectively exclude T&M revenue from their EBITDA normalization, which compresses the headline number before the multiple is even applied.
Net revenue retention above 110%. Buyers want to see that existing clients are expanding — adding seats, layering on security services, upgrading tiers. An NRR above 110% with logo churn below 6% is the profile that gets term sheets returned quickly. Below 100% NRR, the conversation shifts from “what’s this worth?” to “is this a declining business?”
Security service attach rates. MSPs with MSSP capability — SOC operations, incident response, EDR/MDR/XDR — are trading at a premium to pure infrastructure management. The reason is mechanical: security services compress churn (clients don’t switch security providers casually) and raise average revenue per endpoint. Both feed directly into the retention metrics that drive valuation.
EBITDA margins above 20%. Margins matter more than revenue growth in the current PE climate for IT services. A $5M EBITDA business growing at 8% with 22% margins will generally attract more interest than a $5M EBITDA business growing at 15% with 12% margins. Buyers can accelerate growth through acquisition; they can’t easily fix structural margin problems.
Customer concentration below 25%. This is a gating criterion for many PE firms. If your top three clients represent more than 25% of revenue, expect a 10–30% valuation discount — or in some cases, a passed deal. Long-term managed services contracts with SLAs mitigate this better than project-based relationships, but the concentration itself still raises flags.
The Broader Context
MSP valuations exist within a wider IT services M&A landscape that has its own dynamics. Across 8,000+ IT services transactions analyzed by Aventis Advisors from 2015 through 2025, the overall median EV/EBITDA was 10.2x. That number has been remarkably stable — fluctuating between 7.7x and 13.6x over the decade — which suggests that IT services as a category has a well-understood valuation floor and ceiling.
Within that, the subsegment matters. IT consulting trades slightly higher than software development services (10.2x vs. 9.8x as of early 2026), and US-based transactions command a geographic premium over European deals (13.0x vs. 10.2x on 2024 public comparables from Harris Williams). Revenue multiples for MSPs specifically sit around 1.3x EV/Revenue — modest compared to SaaS, which reflects the lower margin profile and higher labor intensity of service delivery.
The structural trend favoring MSP valuations is the sheer volume of PE capital chasing the sector. Add-on acquisitions now represent about 76% of all PE buyout activity in the US — running 340 basis points above the five-year average. MSPs are a natural fit for this strategy: fragmented market, geography-based customer relationships, standardizable operations, and clear paths to multiple expansion through scale.
What This Means If You Own an MSP
The 5–14x range collapses significantly once you know what to look for. A $6M EBITDA MSP with 75% MRR, 112% NRR, an MSSP practice, and healthcare vertical specialization is a different asset than a $6M EBITDA MSP that’s 45% project work with 95% NRR and no security attach. The first might trade at 11–13x. The second, 7–8x. Same EBITDA, very different outcomes.
For owners who are two to three years out from a potential transaction, the implication is that the work you do now on MRR conversion, security service development, customer diversification, and margin improvement has a direct and quantifiable impact on your eventual exit value. At a $6M EBITDA baseline, the difference between 8x and 12x is $24 million in enterprise value. That’s worth some operational focus.
The MSP M&A market is deep and active. PE buyers understand the model, the economics, and the growth potential. The question for any given business isn’t whether buyers exist — it’s whether the business is positioned to attract the right ones at the right multiple.
Sources & Methodology
Aventis Advisors, IT Services Valuation Multiples: 8,000+ transactions, 2015–2025 (updated March 2026). ClearlyAcquired, MSP Valuation Analysis (Q2 2025). Solganick & Company, MSP/MSSP M&A Report YTD 2025 (August 2025). Harris Williams, Technology Services Sector Brief (Q2 2024). PitchBook, Q2 2025 US PE Breakdown. Drake Star Partners, MSP deal flow data (Q1 2025).
Andrew Southwell, CFA is a Managing Director at SSK Capital, a boutique investment bank focused on lower-middle-market M&A advisory. SSK advises family-owned and founder-led businesses in B2B software, technology services, and aerospace & defense on sell-side transactions. Andrew can be reached at andrew.southwell@ssk-us.com or +1-314-750-7207.
