Selling an MSP multiple: why you get stuck between six and eight times EBITDA
AuthorMSP Late NightPublished on:Anyone wanting to sell their MSP at a high multipleenjoys hearing corridor stories of ten, eleven, twelve times EBITDA. The reality for most owners sits between six and eight. Not because buyers are mean, but because your company shows under the bonnet what it is: a perfectly good MSP of which there are thirty others in the region. And that is exactly where it chafes, because you know your outfit is different. Only the figures do not show it.
The pattern is nearly always the same. A call comes in from an acquiring party. The owner thinks: maybe it is time. Figures land on the table, an indication, and then the disappointment follows. Why do they get ten times, and you six and a half. While you have a healthy outfit, recurring revenue, clients who have stayed for years.
It is often not in what you think. Not in your revenue, not in your number of seats, not in the fact that you do hardware alongside recurring. It sits in three metrics that almost every MSP owner reads past because they come from a different world: net revenue retention, revenue per employee, and customer acquisition cost. Those three together decide whether you end up at the top or the bottom of the range. And most owners I speak to do not know their own numbers on these three points. They know what the revenue was, and the profit, and that client retention is “good”. That is not enough when the person opposite goes through fifty sets of MSP accounts a year.
What really lifts the multiple of your MSP
What works is not making your company look prettier for the sale. A buyer smells that from a hundred metres. What works is steering years in advance on the three things a buyer looks at. Net revenue retention, so whether year on year you get more out of your existing clients without only indexing. Revenue per employee, so whether with AI and better processes you have started working smarter. And your funnel, so whether new clients come in structurally without it leaning completely on your own network as owner.
The MSPs heading towards eight or nine have done something simple. They have stopped playing the technician and go into the conversation with the client differently. Take Copilot as an example. In most mid-sized organisations staff have been fiddling with ChatGPT and free tools for months already. The MSP that does not actively guide adoption there is simply leaving revenue and value on the table. Stacking up moments like that across a hundred clients is exactly what pushes your NRR up and what a buyer wants to see.
What buyers actually put on the table: the range per profile
Concretely then. An MSP with around a million EBITDA, one site, classic profile, sits at seven to eight times. Several sites in different regions lifts that to eight or nine. EBITDA above two million puts you in the range of nine to ten. And the really large outfits, certainly with an international buyer at the table, go above ten, towards twelve or more. That is the realistic map. Five times occurs, at the bottom end, and above twelve is not a norm but an exception.
“The multiple is often between six and eight.”
What explains that range is not so much your size, but the risk profile a buyer attaches to your book. One site means concentration risk: if you drop out, the outfit stops. Several sites with their own management is less dependent on the owner and therefore worth more per euro of EBITDA. The same logic applies to your client book. Five clients making up forty per cent of your revenue pushes your multiple down. A hundred clients with nobody above three per cent lifts it. Buyers simply run that through their model, even when they do not say it out loud.
Why eight times is sometimes worse than five
There is a catch few owners see. I recently saw an MSP with a bid range of five to eight times for the same million of EBITDA. The eight-times buyer was a large consolidator: name off the building, website gone dark, team swallowed into the whole. The five-times buyer wanted to keep building with the existing name and work with an earn-out. What is best for you? That depends on whether you want to hand over the keys tomorrow or leverage what you have built for another five years. The highest multiple is almost never the best deal.
And then there is something that structurally goes wrong on the selling side: normalisations, cash and debt, earn-out structures. More and more often part of your purchase price hangs on whether your people and clients stay after the acquisition. I see owners with no view of that at all who send figures across before they understand what a buyer will do with them. Then your negotiating position is gone before you have started.
“Do not just send your figures across.”
A concrete example. An owner gets eight times EBITDA on paper, sees big numbers, signs the LOI. It then turns out sixty per cent of the purchase price is an earn-out over three years, tied to revenue growth the buyer influences themselves through their own purchasing and pricing policy. Net, after three years, there was not eight times left but something between five and six. Had he sat down beforehand with someone who had taken that structure apart, he could have chosen five times cash at closing and got “less” on paper, but more in reality.
So first sit down with someone who looks at your business from a buyer perspective. A baseline measurement, simply having it worked out what you are worth now and where the adjustments sit. What will be taken out of your EBITDA for owner salary, for cars, for private costs that ran through the business? What gets added back for one-off charges? And above all: where are the risk items a buyer will use to push their bid down during due diligence? That costs you a day and earns you months once the real conversations start.
The MSP market is in a phase where either you get called or you are going to get called. Waiting until the letter lands on the mat and only then thinking about figures, positioning and exit is how owners park themselves between six and seven times. Anyone who already knows three years ahead what kind of buyer they want, and steers their NRR and revenue per employee accordingly, will be choosing between several bids instead of accepting one. Plan a baseline measurement before the first phone call comes, not after.