The MSP Landscape

GP Partners

The Managed IT Services space is very active right now. With over 10 acquisition groups strictly focused on acquiring MSPs and competing on price, the landscape is quickly changing. This is driving value expectations to extreme highs. MSPs used to be valued at 3-4X earnings, but now require buyers to offer at least 5x earnings just to be considered. While 5x is a starter, for most MSPs with at least $1M of EBITDA and high recurring revenue, 6-7x is what the market is now asking.

This is great news for MSPs. A market with low-barriers to entry, seeing such high valuations is a dream come true. Anyone that is looking to sell in today's market is taking a ton more cash home than they would have just a few years ago.

Bad news - this is not sustainable and as the market becomes more and more absorbed by just a few main players, the smaller guys will start to get squeezed. Let the good times ride, but remember that we are at the peak.