What Is My IT Services or MSP Business Worth?

IT managed services providers (MSPs) are among the most actively acquired small businesses right now. The monthly recurring revenue model, high switching costs, and growing demand for cybersecurity make MSPs attractive to PE firms and strategic acquirers.

Typical Valuation Ranges

Most MSPs sell for 3x to 5x SDE or 5x to 8x EBITDA for larger operations with $1M+ EBITDA.

MSP valuations are also commonly expressed as a multiple of monthly recurring revenue (MRR) — typically 24x to 42x MRR (2x to 3.5x annual recurring revenue).

Factors that push toward the higher end:

• 80%+ of revenue from managed services contracts (MRR)
• Client retention above 95% annually
• Cybersecurity and compliance capabilities
• Revenue above $1M with consistent growth
• Diversified client base (no client over 10% of revenue)
• Technical team managing clients independently
• Modern stack (cloud-first, automation, RMM/PSA tools)

Factors that push toward the lower end:

• Break-fix revenue dominant (hourly billing, no contracts)
• Owner handles most technical work
• Client concentration risk
• Declining revenue or client attrition
• Legacy technology focus (on-premise servers, older platforms)

Key Value Drivers

Monthly recurring revenue is the dominant valuation driver. MRR from managed services contracts is predictable, sticky, and scalable. Break-fix and project revenue is variable and valued at lower multiples.

Client retention: MSP switching costs are high — migrating IT infrastructure is painful. 95%+ annual retention demonstrates service quality and client lock-in.

Cybersecurity capabilities: Growing demand for security services (SIEM, EDR, compliance) creates premium pricing opportunities and makes your MSP more attractive to acquirers.

How to Increase Your Value

1. Convert to managed services. Move break-fix clients to monthly managed contracts with defined scope and pricing.
2. Add security services. Cybersecurity assessments, compliance (HIPAA, CMMC, SOC 2), and managed security create premium revenue.
3. Diversify clients. Grow your base to reduce concentration risk.
4. Build your team. Hire and train technicians who manage client relationships independently.
5. Standardize your stack. Consistent RMM, PSA, and security tools across all clients improve margins and make integration easier for buyers.

Browse the valuation multiples guide for industry data, or schedule a free call for a confidential valuation.