How to Sell an MSP

Why do buyers want MSPs?

An MSP with a solid base of contracted clients is easier to sell than most small companies. Clients pay monthly, they rely on you for systems they cannot afford to have down, and they tend to stay for years when service is consistent. That combination gives a buyer predictable cash flow from the first month after closing.

The trade-off is that buyers look closely. They will pull agreement dates, check how much work the owner still touches, and separate service work from hardware that mostly passes through at cost. If the records support the story, the firm will attract serious interest. If they do not, price talks stall while the buyer tries to fill in the gaps.

What does a buyer review first?

Most of the early work focuses on the client book. Expect to be asked for specifics, not summaries.

• Monthly recurring revenue. Bring an export from your PSA that shows monthly recurring revenue by client. Buyers will compare that total to bank deposits and to total revenue to see how much of the business repeats.
• Signed agreements. Keep a count of clients under signed agreement and a separate count of clients who have stayed month to month. Both groups have value, but a buyer will treat a long month-to-month history differently from a signed term.
• Agreement terms. Pull the term, renewal date, and termination language for each agreement into one sheet. Gaps here slow diligence because a buyer cannot tell how long the revenue is actually committed.
• Service gross margin. Report gross margin on services separately from hardware and software resale. A resale-heavy month can inflate revenue while adding very little profit, and buyers adjust for that quickly.
• Client concentration. Be ready to show revenue by client for the last twelve months. If one account makes up a quarter of sales, expect harder questions about what happens if that account leaves.
• The tech bench. Name the people who can handle escalations and routine visits without you. A senior technician or a service manager who already runs the board makes the business much easier to transfer.
• Tool stack and documentation. List the PSA, RMM, and backup tools you pay for each month with their contract dates. Buyers will also sample client documentation to check if a new technician could pick up an account without calling you.
• Security practices. Be able to explain who has admin access to client systems and how credentials are stored. Most buyers have seen a loose password practice create a problem after closing, so they ask about this early.

How is an MSP priced?

Pricing usually follows earnings, and the earnings figure depends on how the business runs day to day.

When a manager or a senior technician already runs operations, buyers tend to work from EBITDA. In plain terms, EBITDA stands for earnings before interest, taxes, depreciation, and amortization. The calculation assumes a paid manager is already in the owner role and paid at market rate.

Well-established small MSPs often change hands in the range of four to six times EBITDA. Where a firm lands in that range depends on size and margin and on how much revenue is under contract.

For example, an MSP with $300K of EBITDA would price at $1.2M at 4x. At 6x that same firm would price at $1.8M. Size and margin move a firm within that range. So does how much revenue is under contract.

When the owner is still the main escalation point and holds most client relationships, buyers work from seller discretionary earnings instead. That figure adds back owner pay and owner benefits to profit because the business has been run to support the owner. Owner-run MSPs price on SDE at 2.5x to 4x. Those firms trade at lower multiples, in part because the buyer has to hire a replacement before the owner can fully step away.

That is why two firms with the same top line can sell for very different prices. The one with signed agreements and staff who can run the board without the owner will almost always come out ahead.

How do you get ready to sell?

Most of the preparation is basic record keeping, and it goes faster if you start with the client agreements.

• Build a clean agreement list. Put every client agreement on one list with start date, term, and renewal date. If an agreement lives only in email, scan it and file it where a buyer can find it under a confidentiality agreement. With the terms in one place, a buyer can see how long the revenue is committed and diligence does not stall on gaps.
• Close documentation gaps. Read your client documentation as if you were new to the account. Networks, key applications, and backup schedules should be clear enough that another technician could handle a call without guessing.
• Separate the margins. Split service revenue from hardware and project revenue in your reports for at least the last two full years. Buyers will ask you to do this during diligence anyway, so having it ready saves weeks.
• List the tool stack. Make a simple list of every tool and subscription the firm pays for. Note what each one does and which clients use it. Add when the contract renews. A buyer can then see monthly tool costs and contract dates without chasing them during diligence.

Clean records do more than speed up diligence. They support the price you agreed to at the letter of intent stage, because most reductions late in a deal start with a number the seller could not document when asked.

Can you sell directly to RockHaven?

You do not have to list the business with a broker to sell it. RockHaven buys firms directly, so there is no public listing and no marketing process that puts your name in front of competitors or staff. We charge sellers no fees, so no part of the price you agree to goes to a seller fee.

1. A short confidential call. We talk through revenue and staffing and how involved you are day to day. You can ask how we value a firm and how a transition would work.
2. A review of the numbers. We look at financial statements and the agreement list under a signed confidentiality agreement. Nothing from that review goes outside the deal team.
3. A written offer. If there is a fit we put price and main terms in writing in plain language. You will see how the price is paid and what we are asking you to do during transition.
4. Diligence and closing. We verify records together and work through the purchase agreement with counsel on both sides.

From signed terms to closing is usually four to eight weeks when records are ready. If your firm is a software or other service business outside the MSP core, we still look at it case by case. Our page on how to sell your service business covers that direct route for service firms more broadly. A first conversation costs nothing and does not commit you to a process.

FAQ