MSP Valuation Multiples 2026: What IT Companies Sell For by Size

Short answer: Most MSPs and IT companies sell for 4–12x adjusted EBITDA in 2026. Where you land inside that range is decided mainly by one number — your share of recurring revenue. A small, owner-run, project-heavy MSP sits near the bottom; a larger platform with 80%+ monthly recurring revenue, low churn, and a security or vertical focus sits at the top. This page gives you the real multiple table by size, a calculator to estimate your own range, and the levers that move you up.

1. What MSPs Actually Sell For

Why so wide a range? Because "MSP" covers everything from a one-owner break-fix shop to a security-led platform with long contracts and a management team. Buyers don't pay for the label — they pay for how predictable and transferable the earnings are. Recurring revenue is now around three-quarters of total MSP revenue across the industry, and the buyers paying these multiples are overwhelmingly private equity: roughly seven in ten MSP acquisitions involve a PE buyer, directly or through a platform doing add-ons. See who buys MSPs and why PE pays a premium for the buyer side.

2. MSP Valuation Multiples by Size

The table below shows typical 2026 ranges by earnings size. These are market reference ranges — your actual number depends on the value drivers further down this page.

Reference ranges from Aventis Advisors and industry M&A comps, 2024–2026. Actual multiples vary by recurring-revenue share, churn, contract length, sub-sector, and buyer competition. Confirm against live comps before relying on any single figure.

3. Revenue vs EBITDA vs SDE — Which Applies to You

MSPs are valued on earnings, not revenue — but the type of earnings depends on your size, and getting the language wrong makes owners anchor their own deal too low.

Under ~$2M revenue → SDE (seller's discretionary earnings)

Smaller MSPs are usually valued on SDE: profit plus the owner's salary and discretionary add-backs. Buyers here are individuals, holdcos, and smaller strategics who think in "what does this earn the owner." If that's you, quote SDE, not EBITDA.

Larger MSPs → adjusted EBITDA

Above roughly $2M revenue, PE platforms and strategics value on adjusted EBITDA — profit normalised for one-off items and owner add-backs. This is the basis behind the multiple table above.

MRR / ARR → the quality signal that sets the multiple

Neither SDE nor EBITDA tells the buyer how predictable the money is. That's what monthly recurring revenue (MRR) and annual recurring revenue (ARR) do. Two MSPs with identical EBITDA but 50% vs 85% recurring revenue will not get the same multiple — the recurring one wins. A pure revenue multiple is rare and reserved for very high-growth, recurring-heavy MSPs.

4. What Raises Your Multiple

These are the levers buyers reward. Each one moves you toward the top of your size band:

• High recurring-revenue share. 80%+ MRR is the single strongest signal. It's why managed-contract MSPs beat project shops on price.
• Low churn and long contracts. Multi-year agreements with low logo and revenue churn make the earnings bankable.
• Low client concentration. No single client above ~10–15% of revenue. Concentration is a discount and an earn-out trigger.
• Management that runs without you. If the business depends on the owner, buyers structure an earn-out. Independence buys you cash at close.
• Clean, recast financials. A quality-of-earnings-ready P&L removes the buyer's leverage to chip the price in diligence.
• Security and AI-services revenue. MSSP capability and real AI-services revenue lift both the multiple and buyer demand.

Most of this can be built in the 6–12 months before you go to market — see how to increase your MSP's value before selling.

5. What Lowers Your Multiple

The mirror image. Each of these pulls you toward the bottom of the range — or kills the deal in diligence:

• Break-fix / project-heavy revenue. Unpredictable income is the classic discount.
• Owner-dependence. "The owner is the business" converts your sale to a contingent earn-out.
• Client or vendor concentration. One big client leaving wipes the thesis; buyers price that risk in advance.
• Messy books and undocumented add-backs. If the buyer's accountant can't verify earnings, they assume the worst.
• Non-transferable contracts. Change-of-control clauses that let clients walk on a sale destroy value.

Going to market with these unaddressed is the most expensive mistake an MSP owner makes — more in MSP sale mistakes.

6. How AI Is Changing MSP Multiples

AI is widening the gap between MSPs, not lifting all of them. The split:

• Premium: MSPs that automate their own delivery (cutting service labour cost) and sell AI and managed-security services to clients are earning higher multiples and stronger buyer demand.
• Discount: Undifferentiated, hours-billing or break-fix MSPs are being marked down, because buyers expect AI to compress their revenue model over the hold period.

Practically, "AI-services revenue share" is becoming a number buyers ask for directly. The thesis that decided "recurring revenue = safe" is becoming "recurring revenue + automation + AI services = premium." If you're years from selling, this is the cheapest time to build that line of revenue.

7. Sub-Sector Differences

Not all MSPs price the same. By sub-sector:

• MSSP / cybersecurity — highest multiples. Security is sticky, high-margin, and in structural demand; buyers compete hardest here.
• Cloud MSP — premium when recurring revenue is high and vendor relationships transfer cleanly.
• Vertical MSP (healthcare, finance) — premium for the niche moat: regulatory familiarity and high retention.
• Co-managed IT — strong when contracts are sticky and the client's internal team creates lock-in.
• Managed network / backup & DR — solid, recurring-led, typically mid-range multiples; common PE add-ons.

8. How to Move Toward the High End

The difference between the bottom and top of your size band is often the largest cheque of your career. The path is not a secret — it's preparation:

• Decide if and when to sell — should you sell your MSP?
• Build the value levers above over 6–12 months — increase your MSP's value before selling.
• Understand the buyers and how they underwrite — who buys MSPs.
• Decide whether to run it alone or with an advisor — do you need a broker to sell your MSP?
• See the full sale process end to end — how to sell your IT company.

About the Author

Den Unglin Founder & Lead Exit Advisor

Specialists in selling
MSPs & IT companies.

We focus on managed service providers and IT-services businesses — how they're valued on recurring revenue, what PE buyers underwrite, and how to package a founder-led MSP so it earns a premium multiple instead of a discount.

Den has 18+ years of direct P&L experience across 50+ business types and 12 markets, with a buyer network spanning PE platforms, family offices, and strategic acquirers across the US, EU, and Asia. The valuation ranges on this page reflect how those buyers actually price MSPs in 2026.

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