Upfront reality check:
MSP valuations are not “one multiple.” They’re typically bifurcated by size (add-on vs. platform) and then move materially based on recurring mix, retention, margin quality, and concentration.
Solganick’s Q3’25 private-company ranges put Managed Services (MSPs) at
~0.9x–1.3x EV/Revenue and
~6.5x–12.0x EV/EBITDA,
explicitly noting
add-ons ~5x–8x vs. platforms near ~11x.
| Annual Revenue (USD) | Typical Buyer Category | EV/EBITDA (typical range) | EV/Revenue (typical range) |
|---|---|---|---|
| <$3M | Micro / very small add-on | ~3x–5x (can be lower if owner-dependent) | ~0.5x–0.9x |
| $3M–$5M | Small add-on | ~4x–6x | ~0.7x–1.0x |
| $5M–$10M | Add-on / “scaled small” | ~5x–8x | ~0.9x–1.2x |
| $10M–$15M | Large add-on / pre-platform | ~6x–9x | ~1.0x–1.3x |
| $15M–$30M | Platform candidate (rarer) | ~7x–10x | ~1.1x–1.3x |
| >$30M | Platform / institutional scale | ~8x–12x (best assets can exceed) | ~1.1x–1.3x+ |
Evergreen-style MSP underwriting repeatedly highlights step-changes when crossing $3M / $5M / $10M revenue.
Founders’ “valuation scorecard” flags >$15M revenue as rare and “highly differentiated,” and shows observed ranges expanding into 10x–12x+ territory for strong-metric MSPs.
CRN’s 2025 conference recap frames the same reality: small/struggling MSPs ~2x–4x, strong scalable MSPs ~8x–10x, and fundamentals can add or subtract multiple turns.
Customer Concentration
Typical valuation impact (how it shows up in deals)
Mild concentration (10–15%): usually a multiple haircut and/or more conservative diligence + tighter reps/warranties.
Material concentration (15–25%): frequently a bigger haircut or the same headline multiple but with more contingent structure (earnout, holdback/escrow, seller note tied to retention).
Severe concentration (>25%+): often a deal breaker unless there’s a clear mitigation plan (contract term, renewal history, relationship not founder-dependent).
Recurring Revenue
What buyers want now (not 2019)
Houlihan Lokey explicitly shows “investors raising the bar” from ~50%+ recurring historically to ~80%+ recurring today.
Founders’ scorecard uses <50% vs. >80% recurring as a key valuation divider, stating that 80%+ should come from managed customers rather than project/one-time.
CRN (2025) calls out “premium value” indicators including recurring revenue of ~60%+ (with low churn).
Evergreen’s published minimum screen: ≥50% recurring revenue (managed services + recurring resold product), with a strong preference for recurring managed services
