What is an MSP worth as a multiple of revenue or EBITDA?
MSPs are among the higher-multiple small businesses because buyers prize predictable, contracted recurring revenue. Established, professionally managed MSPs are valued on EBITDA at about 6.0x-11.0x, while smaller owner-operated firms are valued on SDE at roughly 3.5x-7.0x. Translated to revenue, healthy MSPs often land near 1x-2x annual revenue, but EBITDA and recurring mix matter far more than a blanket revenue multiple.
The defining lever is the share of monthly recurring revenue (MRR) under multi-year managed-services contracts versus break-fix or one-time project work. High contracted MRR, strong net revenue retention, a diversified client base with low concentration, documented processes, and a technical team that stays after the sale push you to the top of the range. Heavy project or hardware-resale revenue, client concentration, or owner-dependent technical delivery pull it down.
Buyer type sets the ceiling: an individual buyer typically pays an SDE multiple with SBA financing, while PE-backed MSP platforms and strategics pay on EBITDA and may structure 60%-80% cash at close with the rest as equity rollover or an earnout. DealSeam is not a traditional business broker; where there's a fit, it introduces owners to qualified buyers, with the buyer paying the success fee.
Related questions
Are MSPs valued on revenue or EBITDA?
Primarily EBITDA, at roughly 6.0x-11.0x. Revenue multiples (often about 1x-2x) are used as a quick cross-check, but profitability and recurring mix drive the real number.
What multiple of EBITDA does an MSP sell for?
About 6.0x-11.0x EBITDA for established MSPs, or roughly 3.5x-7.0x SDE for smaller owner-operated firms.
Why do MSPs command high multiples?
Contracted monthly recurring revenue is sticky and predictable, which buyers pay a premium for compared with one-time project work.
What lowers an MSP's valuation?
A high share of break-fix or project revenue, client concentration, low recurring revenue, and delivery that depends on the owner all reduce the multiple.
Sources & methodology
- •DealSeam EBITDA Multiples by Industry
- •DealSeam MSP & IT Services Valuation Guide
This is general educational information, not legal, tax, or financial advice. Consult a qualified CPA and M&A attorney about your specific situation.
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