If you’re looking to grow your MSP or position it for a future sale, there’s one thing that can significantly increase your value in the eyes of potential buyers: a well-structured vCIO (Virtual Chief Information Officer) program.
For many MSPs, the vCIO role gets overlooked, misunderstood, or confused with basic account management. But done right, it can transform client relationships, boost profitability, and make your business far more attractive to buyers.
In this article, we’ll break down what a true vCIO program looks like, why it matters for your bottom line, and how it can help future-proof your MSP.
Many MSPs claim to have a vCIO, but in reality, what they’ve built is closer to a Technical Account Manager (TAM) role. These roles often focus on troubleshooting issues, managing tickets, and occasionally pitching products.
The problem? That approach doesn’t deliver the strategic value clients expect from a true vCIO.
A proper vCIO shouldn’t just manage day-to-day technical issues. Their job is to:
When the vCIO role is treated as strategic instead of transactional, MSPs unlock better client retention, stronger trust, and higher-value relationships.
A well-executed vCIO program isn’t just about better client relationships. It directly impacts financial performance:
Bottom line: vCIO-driven MSPs tend to operate at a higher operational maturity level, which leads to stronger EBITDA and more predictable growth.
If selling your MSP is on the horizon, a strong vCIO program can make a huge difference in valuation.
Buyers today don’t just want to see your ConnectWise dashboards or ticket closure rates. They care about long-term client relationships and strategic alignment. A well-documented vCIO program shows:
This last point is especially important. If clients only trust the owner, buyers see risk. A strong vCIO program creates transferable relationships, making your MSP more attractive and less dependent on you.
If you want to make your MSP more valuable and scalable, here are a few steps to focus on:
Your vCIO isn’t just an engineer or account manager. Choose someone who can speak to business leaders, understand growth strategies, and bridge the gap between technology and business outcomes.
Not every client needs the same level of vCIO engagement. Segment them based on factors like tech maturity, business size, and strategic needs. Some may need quarterly meetings, while others only require annual check-ins.
Move beyond patch reports and ticket stats. Your QBRs should focus on budgets, risk reduction, compliance, and growth opportunities that directly impact the client’s business.
It’s tough, but sometimes the best way to scale your vCIO program is to fire clients who don’t value strategic guidance. This frees up capacity to focus on clients who see IT as an investment, not just a cost.
A mature vCIO program creates happier clients, higher margins, and a more attractive business for future buyers. It helps MSPs:
In a competitive MSP market, this is the kind of differentiation that matters.
If you want to grow your MSP or maximize its value before selling, investing in a structured vCIO program is one of the smartest moves you can make. It strengthens client relationships, improves financial performance, and positions your business as a true strategic partner.
Want to see a deeper dive into this topic? Watch the full webinar replay here: Watch Now
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Contact us today and let’s talk about how we can position your MSP for faster growth and higher valuation.
If you’re running a Managed Services Provider (MSP), you’re probably juggling a lot: keeping clients happy, tackling IT hiccups, and, of course, boosting that monthly recurring revenue. Today’s blog discusses one crucial area that many busy MSP owners tend to overlook: formal customer contracts. This is one aspect that can seriously impact your business, particularly when you’re thinking about selling.
We recently hosted a webinar with ITagree’s Anne Hall discussing exactly why customer contracts matter so much when selling your MSP.
Watch the full webinar here: Why Should MSPs Have Customer Contracts?
A sizable proportion of MSPs that end up on the market don’t have formal contracts in place. While it’s not an automatic deal-breaker, it will lead to a lower valuation or a less favorable payout structure.
Think about it from a buyer’s perspective: no contracts mean more risk for them. The likely outcome? They’ll push for an earn-out, a holdback, or some other performance-based contingency to mitigate the risk. This means you’ll probably get paid a larger proportion of the valuation paid over time rather than upfront, and only if your clients stick around.
Beyond selling, contracts are your shield, protecting your revenue before an exit. They clearly define the services included, help prevent scope creep, and reduce revenue leakage from clients expecting free work that wasn’t part of the original agreement. Adding this otherwise missed revenue ultimately does come in handy when it comes time to sell your business.
Anne Hall shared some critical elements every MSP contract should include:
Watch the full webinar here: Why Should MSPs Have Customer Contracts?
We help MSPs prepare for and execute successful exits—from valuation to closing. Contact us to discuss your goals in confidence.
Ever feel like valuing a Managed Service Provider (MSP) is like staring into a black box? The profit and loss statement might not actually reflect what a business is truly worth. Whether you’re considering an exit or looking to grow through acquisition, there’s one key financial metric you absolutely need to understand: Adjusted EBITDA.
In this post, we’ll pull back the curtain on what Adjusted EBITDA is, why it’s important for MSPs, how to calculate it properly, and how it impacts valuation.
EBITDA of course stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. Adjusted EBITDA goes a step further by normalizing earnings to reflect the real, ongoing profitability of your business by removing personal expenses, one-time costs, or income/expenses that wouldn’t carry over to a buyer. In short, it estimates what a new owner could reasonably expect to earn post-acquisition.
A multiple of Adjusted EBITDA is the most widely used metric in MSP valuations. The biggest factor influencing the multiple is how much top line revenue there is. For instance, a small, solo MSP generating low six figures might trade at roughly 2x Adjusted EBITDA. But a larger MSP with $10M+ in revenue could see a multiples as high as 8–10x. Here are some other factors which influence the multiple:
When you’re crunching the numbers for Adjusted EBITDA, the main goal is to adjust the P&L to reflect which revenues/expects a buyer would actually inherit. Here’s a breakdown of what might typically get adjusted:
These are costs the seller incurred that a buyer wouldn’t expect to absorb.
These are income items that aren’t part of the core, ongoing operations of an MSP.
It’s in the seller’s interest to maximize Adjusted EBITDA to boost their valuation. But it’s important for sellers to be reasonable, because inflating add-backs or being overly aggressive with your adjustments can backfire. Buyers will scrutinize add backs, and if a seller’s add backs are unreasonable, it can seriously damage trust and potentially even derail a deal.
We hosted a webinar titled ‘How to Calculate Adjusted EBITDA for MSPs’ that walks you through the methodology using a fictitious MSP’s P&L and discusses the impact on valuation.
Watch the webinar here: YouTube – How to Calculate Adjusted EBITDA for MSPs
Thinking about selling your MSP?
We’ve helped hundreds of IT service providers navigate the sale process successfully, from valuation to closing. If you’d like a confidential conversation or a free evaluation, contact us.
There’s no question: mergers and acquisitions activity in the MSP space has picked up significantly over the past few years. We’ve seen first-hand more inquiries, higher valuations, and a growing diversity of buyers. Private equity firms are increasingly targeting smaller MSPs, more solo buyers are entering the market, and of course, existing MSPs are still thirsty for growth opportunities. All this attention has led some to speculate: are we in a bubble? To answer that, we need to understand what’s driving this surge in M&A activity. So in today’s blog, let’s take a look at three of the most important factors we see driving M&A acquisitions for MSPs:
The scope of services provided by MSPs has expanded considerably in recent years. Whereas the traditional focus was on infrastructure management, cybersecurity is now a core component. This has created challenges particularly for smaller MSPs, who may not have been able to invest in broadening their services to include robust cybersecurity. Those who are unable to-do-so may not qualify for cyber insurance, and neither may their clients. This poses not only a risk for the MSP in terms of not being protected, but also a risk that clients may churn.
Regulatory obligations have also become more complex, with MSPs expected to comply with frameworks such as HIPAA, NIST, and GDPR. Smaller MSPs may find it difficult to meet the standards. For some, the best path forward is to exit and be absorbed into a larger MSP that has the needed infrastructure and expertise.
The question becomes, do you foresee a future where cybersecurity threats are lessened, or will they continue to increase? While the future is hard to predict, when you consider our current geo-political climate, it seems unlikely that cybersecurity concerns are going away anytime soon.
Another major factor driving acquisitions is the age of MSP owners. Many MSPs still operate under their original founders who started their businesses in the 1990s or early 2000s. Those owners are now approaching retirement age and are looking to exit. Even among younger founders, burnout and family priorities often lead them to consider selling and retiring early.
This trend aligns with broader demographic patterns. Baby Boomers and older Gen Xers are retiring across all industries, and IT services is no exception. It seems probable that the wave of exits is going to continue over the years to come.
Nearly every MSP I’ve ever spoken to gets most of their leads from word-of-mouth or referrals. But this approach only takes you so far, and often MSPs find they hit a ceiling somewhere between $1.5m-$2m in yearly revenue. Scaling beyond that requires significant investment in marketing and sales. But many MSPs aren’t keen to incur the costs to-do-so, and don’t have the patience required to see it through. So, they get stuck.
Even when solid leads come in from marketing efforts, it’s very competitive, and there’s a good chance the lead may be speaking to 5+ other MSPs. Prospects may not appreciate the true value of managed services and may be inclined to go with the lowest bidder.
In instances where you are reaching out to a company who already has an MSP, they likely won’t want to switch providers unless they experience a service failure. Which makes the timing of outreach tricky.
Acquisitions can bypass many of these challenges. Instead of fighting for every new seat, MSPs can grow quickly by acquiring a book of business with established relationships. So, as organic growth becomes tougher, more MSPs are looking at M&A as their preferred option.
Looking ahead, will organic growth become easier? It’s unlikely. Larger MSPs are investing more heavily into marketing, automation, and AI-driven outreach. So going forward, small-to-mid sized MSPs may find it even harder to compete.
When we look at these important factors driving M&A activity in the MSP sector, there’s a strong argument that all three of them are going to persist for the foreseeable future. Could valuations soften or buyer interest shift? Sure, markets always change. But the core reasons behind increased M&A activity don’t appear to be going away anytime soon.
Considering buying or selling an MSP? Contact us today — our team can guide you through the process.
Mergers and acquisitions (M&A) transactions can be complex—especially for managed service providers (MSPs) juggling technical delivery, client relationships, and growth goals. In this guide, we distill insights from our recent webinar with legal expert Mick Misra (Coleman Greenberg Business Law) into actionable takeaways. Whether you’re buying or selling, here’s what you need to know to structure deals that protect your interests and maximize value.
Action Step: Early in negotiations, align on structure. If asset sale, map out which contracts or certifications require assignment consent; if equity sale, plan due diligence on liabilities and tax impacts.
Action Step: Review your entity type ahead of a deal to identify potential roadblocks (e.g., S Corp restrictions) and consider pre–transaction restructuring if needed.
Action Step: Inventory all client/vendor contracts and certifications. Flag any that require counterparty consent or are non‑assignable.
Action Step: Craft clauses with reasonable duration, geographic scope, and industry limits. Tie consideration to sale proceeds or severance for each signatory.
Action Step: Build in a 90‑day post‑closing window to finalize allocations in good faith and consult with an independent accountant if buyers and sellers disagree.
Action Step: Negotiate clear subordination language and consider partial escrows or letters of credit to backstop deferred payments.
Action Step: Maximize cash at closing; structure earn‑outs or deferred payments in escrow to mitigate enforcement risk abroad.
Action Step: Agree on precise definitions (e.g., “deferred revenue,” “prepaids”) and a timeline (30–90 days) for post‑closing adjustment.
Join us for a deep‑dive webinar where we discuss these legal strategies—and answer your questions.
➡️ Watch the Webinar: Legal Considerations for MSP M&A with Mick Misra
When it comes to selling or buying a Managed Service Provider (MSP), misinformation can cloud good decision-making. We often hear MSP owners assume their business is “too small” or “not ready” for a sale. But the market is far more dynamic and flexible than many realize. In this blog, we’ll walk through five of the most common myths about MSP M&A.
Or if you’d prefer, we also recently released a short video where we break down these five myths in detail. Watch the video: 5 Myths About MSP M&A
Truth: Smaller MSPs are sough after. While the multiples may be lower compared to larger firms, there’s still strong buyer interest, especially from mid-sized MSPs looking to expand their footprint or acquire accounts.
In some cases, where the MSP for sale is very small, the deal may be structured as a simple referral arrangement. The seller would earn a percentage of revenue over time rather than a lump sum upfront.
Truth: Key-man risk is a real concern, but manageable. Buyers often address this risk by structuring deals to include earnouts, where future payments depend on customer retention.
Owners of one-man shops who are leaving the business may also need to take on more responsibility during the transition period. However, this doesn’t make the business unsellable, it just means the transition plan becomes critical.
Truth: About half the MSPs we help sell don’t have formal customer contracts. An absence of contracts may affect deal structure, with a higher proportion of the valuation tied to performance-based payments. But many buyers appreciate client relationships and service continuity more than just paperwork.
Truth: If one or two or five clients make up most of your revenue, it raises concerns and will be a deal breaker for some buyers. However, for others this risk can be addressed through creative deal structuring (e.g., earnouts, holdbacks) and by clearly demonstrating account stability.
Truth: While MSPs with monthly recurring revenue (MRR) command stronger interest and more favorable terms, there are still lots of buyers interested in MSPs with substantial revenues pertaining to projects, time-and-materials, or block-hours. In fact, some buyers will see these MSPs as ripe for upselling, where recurring contracts can be introduced post-acquisition.
Each deal is unique, and many perceived “deal breakers” can be addressed with thoughtful planning and creative deal structuring. If you’ve held back from exploring M&A because of one of the myths above, it may be time for a second look.
If you’re thinking about selling your MSP, whether you’re ready now or just exploring your options, we’re here to help. Contact us to start the conversation.
In today’s fast-paced managed services environment, operational efficiency isn’t just a nice-to-have—it’s the cornerstone of sustainable growth and enhanced enterprise value. Whether you’re aiming to scale your MSP, improve profitability, or prepare for a future sale, refining your operations can unlock significant financial rewards.
Operational maturity reflects how effectively your business functions without constant owner intervention. At lower levels, MSPs spend most of their time reacting to urgent issues. As you advance up the maturity scale, predictable processes and clear accountability reduce firefighting and free up bandwidth for strategic growth.
Why It Matters:
Action Step: Conduct an operational maturity audit using a 1–5 scale (e.g., Service Leadership’s model). Pinpoint gaps and choose one process to standardize this quarter.
Impact: These issues cap revenue—often below the $2M mark—and erode potential valuation multiples.
Action Step: Identify your biggest bottleneck (e.g., sales dependency). Delegate proposal creation to a dedicated team member and track weekly conversion rates.
A fractional integrator (similar to a part-time COO) partners with visionary MSP owners to:
Benefits:
Action Step: Track how much time you spend on operations versus strategy. If operations exceed 30%, explore contracting a fractional integrator.
Frameworks like EOS, Scaling Up, and Gazelles provide structures—One-Page Business Plans, 90-day Rocks, Level 10 Meetings—that bring clarity and accountability to leadership teams.
Options:
Action Step: Choose your path and schedule your first leadership retreat or discovery call this quarter.
Action Step: Run a service-line profitability review. Select one unprofitable client to offboard or repricing discussion this month.
Action Step: List three tasks to delegate next week, measure the hours freed, and plan how you’ll deploy that time.
We hosted an in-depth webinar exploring these concepts and real-world MSP examples.
➡️ Watch the Webinar: The Implications of Operational Efficiencies on Valuation from an Integrator’s Point of View
Empower your MSP to run smoothly, scale efficiently, and achieve the valuation you deserve. If you’re tired of putting out fires and ready to build a sustainable, high-value business, contact us now. Let’s work together to move up the operational maturity ladder, unlock new growth, and maximize your MSP’s valuation!
In this insightful webinar, Hartland Ross speaks with operations expert Kevin Heggeroser about how operational maturity affects MSP valuation. Kevin shares his experience as a fractional COO helping MSP owners implement systems that increase enterprise value and make businesses more attractive to potential buyers.
The webinar emphasizes that MSPs focused on reducing owner dependency through operational systems and specialization will command higher valuations. For owners considering eventual exit, investing in operational maturity delivers better ROI than simply chasing new clients or raising prices.
Contact The Host Broker if you’re planning to sell your MSP.
The MSP M&A market is more competitive than ever, with high demand from buyers—including private equity firms and strategic acquirers. But what does this mean for MSP owners considering a sale? In this episode of Sunny’s Silver Linings Podcast, Hartland Ross joins IT By Design CEO Sunny Kaila to discuss the shifting MSP M&A landscape and what it means for sellers.
If you’re considering selling your MSP or just want to understand its worth in today’s market, this webinar is a must-watch.
Looking to explore your MSP’s valuation or discuss potential exit strategies? Contact us today for a consultation!
Here’s our detailed webinar on how to calculate Adjusted EBITDA for Managed Service Providers (MSPs), hosted by Devin Rose from The Host Broker. In this session, we dive deep into why Adjusted EBITDA is a crucial metric for MSP valuations, and how to accurately calculate it.