Managed service providers in North America continue to command valuations between six and eight times EBITDA, driven by buyer interest in recurring revenue streams and long-term customer contracts, according to insights shared at GTIA ChannelCon 2026 by Craig Fulton, an M&A advisor at Evergreen. The merger and acquisition landscape for MSPs remains active as private equity firms and strategic acquirers pursue businesses built on predictable income and established client relationships.
Fulton told the conference that MSPs with recurring revenue representing 70% to 75% of total revenue are considered financially solid. "The reason you've seen the flood of acquisitions is because [MSPs are] sitting on gold with their customer contracts," Fulton said during the Visionaries Power Panel. Artificial intelligence hasn't yet created a distinct valuation premium, though deploying AI to boost scalability, efficiency and profitability can enhance the core financial measures that buyers evaluate.
Many MSP owners overvalue their companies because they've operated from a technical rather than financial perspective, according to Fulton. Excessive software costs, poorly organized accounting and owner compensation set below market rates can all decrease adjusted EBITDA when buyers conduct their due diligence. Owners should start preparing at least three years before a planned sale by running the business as if it will change hands, which includes cleaning up expenses, documenting procedures, formalizing client agreements and accounting for costs a new owner will face. An owner who pays themselves an artificially low salary may see EBITDA adjusted downward to account for the expense of hiring a replacement executive, Fulton noted. The ChannelCon panel also highlighted that buyers increasingly scrutinize how well an MSP uses AI to operate efficiently, in addition to examining recurring revenue, documentation quality and organizational culture.
Selecting the right acquirer requires more than evaluating financial offers, the conference discussion emphasized. MSP owners should first clarify their financial objectives and develop a succession strategy, then consider whether they want to exit immediately, stay involved or maintain the company's brand and operational approach. Different buyers may be after geographic reach, vertical market expertise, talent acquisition, customer portfolios or financial synergies, and their integration philosophies range from preserving local identity to absorbing employees and systems into a larger entity. Panel participants said owners have a responsibility to employees and customers to understand post-transaction plans. Fulton also warned owners to prepare emotionally, noting that selling a business can reshape an entrepreneur's identity as profoundly as their bank account. "It's not a transaction. It's more," he said. "It's something they're probably only going to do once. No one wants to live in regret." As consolidation continues across the MSP sector, business owners who invest years in financial discipline, operational transparency and strategic planning will be best positioned to negotiate favorable deals that align with both their financial goals and their vision for the company's future. For founders who've built their businesses from scratch, recognizing the emotional weight of a sale and choosing a buyer whose approach matches their values may prove just as important as the multiple they negotiate.