How it works
Valuation math for MSP exits
- Start with EBITDA
Earnings before interest, taxes, depreciation, and amortization. The baseline figure buyers use to anchor the deal.
- Apply the right multiple
MSPs typically trade at 4x–7x EBITDA. Recurring revenue percentage, client concentration, and team depth all push the multiple up or down.
- Adjust for earnout
Many deals include an earnout tied to post-close performance. Model the range from bear to bull case.
- Compare scenarios
Run the numbers at multiple EBITDA levels and multiples to understand your walk-away price before entering negotiations.