MSP Valuation
Multiples

How MSPs Are Valued: Revenue vs. Adjusted EBITDA Multiples

Buyers value most MSPs on a multiple of adjusted EBITDA, not revenue. Adjusted EBITDA takes your reported earnings and adds back owner-specific or one-time expenses that a new owner would not carry, which gives buyers a cleaner picture of the profit the business actually produces. For a fuller walkthrough of how adjusted EBITDA is built and why it differs from the number on your tax return, see Salt Creek's EBITDA and business valuation basics guide. For any deal of meaningful size, that adjusted profit figure, times a multiple, sets the enterprise value.

Revenue multiples show up mainly as a rough shorthand, and they mislead more often than they help. Two MSPs with the same revenue can be worth very different amounts because one earns a healthy margin on recurring contracts and the other resells hardware at thin margins. The deal data makes the point. Aventis Advisors reports that MSPs sold at a median of 1.1x revenue and 9.8x EBITDA from 2015 to 2025, and notes that the two medians only meet when EBITDA is about 11% of revenue. At a 15% margin, 1.1x revenue equals only 7.3x EBITDA; at 20%, 5.5x. A revenue multiple tells you nothing about which side of that line a business sits on, because it ignores how much profit sits behind each dollar of sales.

Revenue multiples do surface for smaller or thin-margin shops, often because reliable EBITDA is hard to pin down when owner compensation and personal expenses run through the books. In those cases a revenue figure serves as a proxy, not a precise measure. The fix is not to accept the proxy; it is to clean up the financials so the better metric becomes available to you.

What the Transaction Data Says About Size

Deal size moves the multiple more than any other single factor, and the mechanism is buyer competition and perceived risk. Larger MSPs carry deeper management teams, more diversified customers, and lower single-owner dependence, so more buyers can underwrite them and each buyer discounts them less. Two published datasets describe that gradient from different angles.

The first is a ladder by earnings rather than deal value, which is the more useful frame for an owner who knows their own EBITDA. A ConnectWise post citing GP Partners puts MSPs at about 4 to 5 times EBITDA in the $250,000 to $1 million bracket, 5 to 6 times at $1 million to $2 million, and 6 to 8 times at $2 million to $5 million (ConnectWise). Two cautions on that ladder: these are third-party reported estimates rather than transaction records, and the post dates to 2021, so it describes an earlier market. It is useful for the shape of the gradient more than the precision of any single bracket.

Those brackets are as published by GP Partners via ConnectWise in 2021. They are third-party reported estimates, not Salt Creek valuations.

The second dataset works from completed transactions. Aventis Advisors, drawing on its own deal database (Mergermarket, acquirer announcements and its own research), reports that MSPs sold at a median of 9.8x EV/EBITDA across 80 acquisitions announced from 2015 to 2025 with a reported multiple. The middle half ran from 6.2x to 13.5x, and the median deal size was $34 million. Split by the target’s revenue, the size gradient is plain.

Source: Aventis Advisors, published October 28, 2026. MSP acquisitions announced 2015 to 2025 with a reported EV/EBITDA multiple and a known target revenue (76 of the 80 deals). Third-party reported figures, not Salt Creek valuations.

Two things in that data are worth sitting with. First, MSPs sell a little below IT services as a whole: Aventis puts the MSP median at 9.8x EBITDA against 10.3x for all IT services, with revenue multiples level at 1.1x. Its broader IT services data shows how much size matters across the category: deals under $5 million sold at a median of 6.7x EBITDA, against 11.7x for deals of $50 million to $100 million. Second, the 9.8x headline is lifted by larger companies. Under $10 million of revenue the median is 7.5x, and 53 of the 80 deals date from 2015 to 2019, although the 15 from 2023 to 2025 had a median of 9.6x. An owner who anchors on 9.8x because it is the headline number is anchoring on a different market than the one most owner-operated shops are in.

Who This Article Is For

This article is for you if you own an established MSP and want to understand where your business likely sits before you sit down with an advisor. It builds on Salt Creek's MSP M&A advisory page, which covers the buyer landscape and sale-process basics for managed IT services companies, and goes deeper on the multiples question specifically. Salt Creek is built for founder-owned and family-owned companies with roughly $2 million to $75 million in revenue, generally with at least $500,000 of adjusted EBITDA. The segments and ranges below help you place your business roughly within the market, not to the decimal. Your actual number depends on details no article can see, including your recurring revenue quality, customer concentration, and how much of the business runs without you. Treat what follows as a map, not an appraisal.

The Four MSP Market Segments

Buyers tend to sort MSPs into four rough groups when they think about value: subscale and break-fix shops, pure-play recurring-revenue MSPs, cloud and infrastructure specialists, and security-forward MSPs and MSSPs. Each group tends to trade in a different multiple range for reasons we explain below.

These lines are qualitative, not rigid. Most real businesses blend characteristics, and a shop can sit near the top of one segment while carrying weaknesses from another. Treat the groupings as a way to orient yourself, not as fixed categories a buyer applies mechanically.

Subscale and Break-Fix Shops

Subscale and break-fix shops sit at the bottom of the market. Most of their revenue comes from hourly work and one-time projects rather than recurring contracts. A buyer looking at project revenue sees income that resets to zero each month and has to be re-earned. That uncertainty is the main reason these businesses trade at a discount to larger recurring-revenue MSPs.

The published figures reflect that discount at the small end. In Aventis Advisors’ deal data, MSPs with under $10 million of revenue sold at a median of 7.5x EBITDA, with the bottom quarter at 5.5x or less, and GP Partners’ older ladder puts shops with $250,000 to $1 million of EBITDA at about 4 to 5 times. Aventis reports that Evergreen Services Group, the busiest MSP buyer in its count, says recurring revenue earns a “meaningfully higher multiple.” In practice, buyers tend to price the two revenue types separately. A shop split evenly between recurring and project work is not valued at a blended average by accident; it is valued as two businesses stapled together, one of which the buyer is far less interested in owning.

The path out of this range is straightforward to describe and hard to execute. Converting break-fix clients onto recurring managed-services contracts raises the share of revenue a buyer can count on, which is the single largest lever at this size. Cleaning up documentation and ticketing records helps too, because a buyer can only credit revenue and margin they can verify. A shop that makes both moves may stop being valued as a break-fix business and start being compared against recurring-revenue MSPs, where the ranges are meaningfully higher. Because that work takes quarters rather than weeks, it belongs in the planning window covered in our guide on when to start exit planning.

Pure-Play Recurring-Revenue MSPs

Pure-play recurring-revenue MSPs are the segment most owners picture when they think about what an MSP is worth. These businesses run on multi-year managed-services contracts rather than project work, and they form the reference point most sellers benchmark against. An analysis of 80 MSP acquisitions announced from 2015 to 2025 found a median of 9.8x EV/EBITDA at a median deal size of $34 million, according to Aventis Advisors (published October 2026). As noted above, most owner-operated shops sit well below that deal size, so the median reflects larger, more mature businesses than the typical seller.

Where a specific business lands depends heavily on its size. Aventis’ size-segmented data shows the median rising from 7.5x EV/EBITDA for MSPs with under $10 million of revenue and 8.2x under $20 million to 11.2x at $20 million and above. Larger deals command more because buyers view scale as lower risk and easier to integrate.

Raw recurring-revenue percentage matters less than the quality of that revenue. Two shops at 80% recurring mix can be valued very differently if one holds signed multi-year contracts with 90%-plus retention and the other runs on month-to-month arrangements that any client can cancel. A buyer-underwriting framework from Auxo Capital Advisors states plainly that buyers do not pay a premium simply because revenue is recurring, and instead test whether the base is “durable, profitable, documented, transferable, and likely to survive after a change in ownership.” Contract length, assignability, and gross revenue retention move a business toward the top of its range far more than the headline mix figure.

Owners also face a wide buyer field: Aventis counts more than 500 different buyers of MSPs from 2023 to 2025, with the ten busiest making only about 9% of MSP deals since 2015. That breadth is worth understanding before you run a process, because it is the condition that makes a competitive sale process worth running rather than negotiating with the first buyer who calls.

Cloud and Infrastructure-Focused MSPs

MSPs built around cloud migration, hosting, and infrastructure management often sit toward the higher end of the generalist range. Margin and client stickiness explain why. Once you manage a client's infrastructure, moving that workload to a competitor is disruptive and expensive for the client, so retention stays high. High-margin recurring managed services also convert more cleanly to EBITDA than resale-heavy revenue, and buyers pay for durable EBITDA.

No published dataset we found separates cloud-focused MSPs from generalists, so treat this as a direction rather than a number. The closest reference is size: in Aventis Advisors’ deal data, MSPs with $20 million or more of revenue sold at a median of 11.2x EBITDA, and those are the larger, more infrastructure-heavy operators.

Cloud specialization carries one qualitative risk worth naming. Depending on a single hyperscaler or a single platform concentrates your business in one vendor's pricing, program terms, and roadmap. A buyer may read heavy dependence on one provider as fragility, which can offset some of the premium that stickiness and margin would otherwise earn. Public data does not put a number on that discount. A buyer weighs it during diligence rather than applying a fixed adjustment.

MSSP and Security-Forward MSPs

Security-forward MSPs and true managed security service providers (MSSPs) sit at the top of what buyers say they will pay for, though the available data describes that premium in words rather than numbers. Moore Kingston Smith frames the reason as demand and defensibility: cybersecurity is growing faster than other IT segments, and boards, regulators, and insurers are all pushing more spend toward it.

The distinction that matters to buyers is whether a business is a true MSSP or an MSP that has bolted security onto an existing stack. Moore Kingston Smith describes true MSSPs as “built on core security operations centre capabilities” with regulatory-grade infrastructure such as ISO 27001 and CREST accreditation. Those accreditations, skilled personnel, and continuous threat-intelligence spend raise the barrier to entry, which the source says produces higher average revenue per user and more defensible market positions.

When buyers underwrite these businesses, Moore Kingston Smith points to four diligence priorities: operational maturity, meaning defined processes and a skilled team; scalability, meaning whether the shop can onboard clients without service degrading; client concentration, because a diversified base lowers risk; and platform versus bolt-on fit, which separates a real security platform from marketing language dressed up as one.

The same source states that MSSPs using AI-powered threat detection, automation, and extended detection and response command premium valuations. That claim is qualitative and directional, and it is worth reading alongside our own view on how AI is actually changing business, which is more skeptical about AI claims than most sell-side material. No source attaches a specific multiple or percentage premium to AI capability or security attach, so weigh any number you see for this segment with caution, including numbers published by firms that compete with us. A security story only supports a higher multiple when the revenue behind it is recurring, profitable, documented, and spread across the customer base. Attach that is thin or aspirational tends to get discounted back to a generalist range.

Segment Comparison at a Glance

The table below places the four segments side by side using publicly reported figures. Real businesses often blend characteristics across these segments, so treat the ranges as directional benchmarks rather than a formula for any single company.

The subscale figure is GP Partners’ 2021 ladder via ConnectWise; the recurring figure is the interquartile range and median for MSPs under $10 million of revenue in Aventis Advisors analysis of 80 MSP acquisitions from 2015 to 2025. The MSSP premium reflects qualitative commentary from Moore Kingston Smith, published in June 2025, which describes premium valuations without publishing a specific multiple. None of these ranges are Salt Creek's own valuations. They are third-party estimates we use as market context, not a substitute for reviewing your financials.

How Recurring Revenue, Concentration and Owner Dependence Move Your Multiple

Two MSPs in the same segment can trade at very different multiples, and the gap usually comes down to three things: how durable the recurring revenue is, how concentrated the customer base is, and how much of the business runs through the owner. Each one cuts both ways.

The clearest published illustration is a worked example from Auxo Capital Advisors (published June 2026, updated October 2026). Two MSPs each have $5.0 million of revenue and $1.0 million of normalized EBITDA. Auxo labels the figures illustrative.

Source: Auxo Capital Advisors, 2026 worked example; the full example also compares contract quality, PSA/RMM maturity and security attach. Illustrative figures, not Salt Creek valuations.

The recurring mix differs by only four points. The value gap is $1.75 million of enterprise value and $2.5 million of cash at close, because MSP B also takes more of its price as deferred or contingent consideration. Auxo puts the difference down to buyer confidence: lower churn, less concentration, stronger contract files and cleaner systems. The levers below are where that confidence is won or lost.

Recurring revenue durability matters more than the headline percentage. Buyers do not pay a premium simply because revenue is recurring, according to the buyer-underwriting framework from Auxo Capital Advisors. What they test is whether the recurring base is profitable, documented, and likely to survive after the owner leaves. A book of month-to-month clients reads as fragile even at a high recurring mix.

Customer concentration works the same way. In the Auxo example, a 24% top customer against 9% is one of the differences between 7.0x and 5.25x. Auxo also notes that a client can be a modest share of revenue but a material share of EBITDA, service burden or founder attention, so measure concentration on gross profit as well as revenue. Some concentration is normal in an owner-operated MSP and not disqualifying, but the more you carry, the more of your price arrives contingent rather than at closing. Auxo states that buyers often address concentration through “lower valuation, higher escrow, earnouts, or customer-retention conditions,” which is the mechanism worth understanding: concentration frequently shows up in the structure of a deal before it shows up in the headline number. Vendor and industry concentration raise similar questions, though published data offers little to quantify them.

Contract terms sit close behind. Multi-year, assignable agreements with renewal and price-escalation language protect margins and give a buyer confidence the revenue transfers cleanly. Weak termination clauses or informal handshake arrangements do the opposite and slow diligence. Assignability in particular is worth checking before you go to market, because a contract that requires client consent on a change of control converts every major account into a diligence condition.

Management depth is often the largest single swing for owner-operated shops. When the founder still controls sales, escalations, vCIO relationships, and the biggest accounts, buyers see the value sitting in one person rather than the company. Auxo notes that even with recurring revenue, high founder dependence can reduce valuation support because the buyer must underwrite transition risk, and that a buyer may charge a replacement cost for the founder's roles against EBITDA. Weakness here can also shift value into earnouts, seller notes or rollover equity. Salt Creek's guide to how a sale process typically unfolds covers how buyers structure around founder dependence in more detail, and our guide on what buyers look for in an acquisition target covers the same dynamic across the lower middle market.

Documentation and tooling hygiene shows up as a discrete diligence line rather than a soft impression. Auxo notes that PSA and RMM maturity affects how buyers assess ticketing discipline, endpoint visibility, automation, billing accuracy, SLA performance, account profitability, and post-close integration risk, and that weak systems lead buyers to preserve “price optics while shifting more risk into deal structure.” That is worth reading twice: poor tooling does not always cut the headline price, it moves money into escrow and earnout where you may never collect it.

Retention and growth round out the picture. Aventis reports that Evergreen Services Group, the busiest MSP buyer in its count, looks for client churn under 5%, growth over 10%, a top client under 20% of revenue and a top five under 50%. Churn compounds: at the 2.4% monthly churn in Auxo's weaker example, a business loses roughly a quarter of its book each year and has to re-sell it before it can grow.

How MSP Multiples Compare Across the Lower Middle Market

MSPs are a business services business with an unusually good revenue model, and the comparison to neighboring sectors explains both the premium and its limits.

• Against the broader lower middle market. GF Data’s latest published small-deal tiers, for the first half of 2025, put average purchase price multiples at roughly 5.5x trailing EBITDA at $1–5 million of enterprise value and 6.2x to 6.7x at $10–25 million across all industries. Its overall average was 7.0x in the second quarter of 2026, down from 7.3x in the first, according to ACG. A recurring-revenue MSP at the same size generally sits at or above that, which is the contract base being paid for. Our guide to EBITDA and valuation basics covers those cross-industry brackets in detail.
• Against other business services. Contracted revenue is rewarded over project revenue in every services vertical, but few of them have a metric as clean as managed-services MRR to prove it. See our guide to M&A advisors for business services companies.
• Against industrials and manufacturing. Capital intensity puts weight on maintenance capital expenditure, which EBITDA deliberately ignores, so a sophisticated buyer looks past EBITDA to earnings less required reinvestment. MSPs are asset-light by comparison, which is part of why the multiple is higher. See our guide to M&A advisors for industrials and manufacturing.
• Against consolidating sectors generally. MSP buying is substantially a roll-up story, and negotiating against a serial acquirer is a different exercise from negotiating against a one-time buyer. See why roll-ups are heating up for how that changes leverage, and our guide on strategic versus private equity buyers for who shows up at each size.

Getting a Range Specific to Your Business

The published ranges in this article tell you where MSPs generally trade. They cannot tell you where your business would land, because that depends on the details buyers examine in your financials and contracts. A preliminary valuation conversation is how you turn a market range into an estimate that reflects your recurring revenue, customer mix, and management depth.

Jack and Connor handle these conversations directly, and an early discussion carries no cost or obligation to sell. That founder-level involvement is the reason a direct conversation gives you more than any multiple you read online.

If you want to understand your options, start with our MSP M&A advisory page, then review how Salt Creek approaches business valuation and how a sell-side process typically compares to working with a business broker.