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.