IT Managed Services (MSP) Business Valuation
Who this is for
MSP owners evaluating a sale or partnership, PE firms building technology services roll-ups, and strategic buyers assessing IT services acquisitions in specific geographies or verticals.
What drives value in IT Managed Services
- Monthly recurring revenue (MRR) as a share of total revenue
- Average contract length and auto-renewal provisions
- Customer retention rate and NPS scores
- Gross margin on managed services contracts
- Technician utilization and labor cost management
- Vendor certifications and partner-tier status (Microsoft, Cisco, etc.)
Valuation methods we use
MSPs are valued on EBITDA multiples with a premium for high recurring revenue mix. Revenue multiples applied to MRR provide a secondary check, and roll-up acquirers often apply strategic premiums for geographic or vertical fit. This tool is informational only. Output is driven by your inputs and does not constitute a formal appraisal or certified valuation.
Typical metrics and inputs
MRR
Monthly recurring revenue from managed contracts; the core value driver.
Recurring revenue %
MRR as a percentage of total revenue; >60% is desirable for premium multiples.
Customer retention rate
Percentage of MRR retained annually; >90% is strong for SMB-focused MSPs.
Gross margin %
Managed services gross margin after labor and vendor costs; typically 40–55%.
Average seat size
Average managed endpoints per client; larger seat counts indicate stickier, more complex engagements.
Example scenarios
Regional SMB MSP
An MSP with $2.5 M MRR, 70% recurring revenue mix, and 92% retention might trade at 6–8× EBITDA in a PE roll-up.
Vertical-focused security MSP
A healthcare-focused MSSP with compliance expertise and $1 M MRR might command a 10–12× EBITDA multiple due to specialized vertical positioning and stickier contracts.
Frequently asked questions
What multiple do MSPs sell for?
MSPs typically trade at 5–8× EBITDA; those with cybersecurity specialization or high MRR mix can reach 8–12×.
How important is the recurring revenue mix?
Very — buyers heavily discount project-heavy MSPs. A 60%+ recurring revenue mix is the typical threshold for premium multiples.
Do certifications affect value?
Yes — Gold or Platinum partner status with Microsoft, Cisco, or AWS demonstrates technical credibility and may protect vendor margins.
What size MSP attracts PE buyers?
PE roll-up acquirers typically target MSPs with $500 K+ EBITDA; strategic buyers (larger MSPs) will consider smaller businesses in attractive geographies.
Is this a certified appraisal?
No. This tool provides informational estimates only. Engage a technology M&A advisor for formal transactions.
Run your IT Managed Services valuation
Get a professional-grade valuation report using DCF, comparable companies, precedent transactions, and scenario analysis — for just $9.99.
Join the waitlist →Related industries
Subscription SaaS
Value a subscription SaaS business using ARR multiples, Rule of 40, and DCF. Benchmarked against public SaaS comps. Reports for $9.99.
On-Prem Software
Value a perpetual license or on-premise software business using maintenance ARR, EBITDA multiples, and migration optionality. Reports for $9.99.
Professional Services
Value a consulting, accounting, legal, or advisory firm using EBITDA multiples, revenue per professional, and client retention analysis. Reports for $9.99.