Independent business valuation · IT managed services

You've Had an Offer for Your IT Managed Services Business. Is It Fair?

The letter quotes a multiple of your EBITDA. It does not say how much of that EBITDA the buyer believes is recurring, or how much of the price disappears once your support contracts billed in advance are treated as debt. An independent valuation tells you both, in two working days, before you reply.

Owners of IT support and managed services companies usually come to us after a phone call they did not ask for. A private equity-backed group is buying MSPs across the region and yours is on its list. A larger competitor wants your client base. Or a co-founder wants out, or your service desk lead has asked whether the team could buy the business. Sometimes there is no approach at all, only a retirement date and no idea whether the business pays for it.

The first figure you hear will come from someone who has done this many times before. Consolidators buy MSPs as a programme. You will sell one business, once, and you are the only party in the room without a valuation of your own.

Email Mark for a free discovery call See what a valuation report contains

The stakes

What finding out late costs

An illustrative MSP in the North of England with £9.0m turnover, about half of it contracted monthly support and the rest licence resale, hardware and projects. Reported EBITDA was £1.40m. A peer who had sold to a consolidator told the owner that MSPs go for eight times EBITDA, so he expected about £11.2m. The company and every figure are fictional.

Illustrative figures, £000
Reported EBITDA	1,400
Margin on a one-off Windows 11 laptop refresh removed	(120)
Year-end vendor incentive payment that may not recur, removed	(80)
Service delivery manager costed in to replace the owner's escalation and account role	(75)
Internal development of the client portal capitalised, reversed	(60)
One-off legal costs on a client dispute added back	25
Maintainable EBITDA	1,090
Enterprise value at an illustrative 6.0 times	6,540
Cash at completion	1,300
Deferred income on support contracts billed annually in advance	(650)
Bank loan	(200)
Working capital below the normal level	(100)
Equity value to the owner	6,890

The gap between £11.2m and £6.9m opened in two places. No buyer pays a recurring-revenue multiple on margin from a laptop refresh that happened because Windows 10 reached end of support in October 2025 (Microsoft, 2025). Much of the healthy cash balance was clients' money for support not yet delivered, which the buyer deducted as debt. The 6.0 times multiple is for illustration only. A real valuation sets it from the terms and margin of your own support contracts, then checks it against comparable MSP transactions.

The numbers you have been given

Who told you what your MSP is worth, and what do they gain from the answer?

The first number an MSP owner hears usually arrives on a consolidator's letterhead or in a broker's pitch, and whoever gives it has a stake in where it lands.

The buyer

wants to pay as little as you will accept. A consolidator that has integrated a dozen MSPs knows from its own figures which kinds of client drift away after a change of ownership, and which of your monthly invoices are really Microsoft licences. Its opening letter prices both before you have thought about either.

A broker

competing for your instruction has a reason to quote high. The easy route is to call every monthly invoice recurring revenue, licences and backup storage included, and apply the multiple consolidators pay for managed support. A large number wins the mandate. The buyer's due diligence team splits the revenue properly months later, and the price falls with it.

Your accountant

files your accounts every year and knows the numbers well. Those accounts show one turnover line for support, resale and projects, though, and separating contracted income from one-off work, or arguing over deferred income on prepaid support with a buyer's due diligence team, may be something they have never had to do.

None of them is acting in bad faith. Each is answering a different question from yours, which is what your contracted support base is worth to a buyer today and how much of that is left for you once deferred income has been taken off.

Independence

Why our valuation is independent

When we value your business, we have no reason to push the number up or down. The fee is fixed and agreed before any work starts, and it is the same whatever the number turns out to be. You are not signing up to a sale, and nothing in the engagement commits you to anything further.

The report is yours. Show it to a buyer, your bank, your accountant, your co-founder or your family. Every figure in it traces back to one of three valuation methods, with each adjustment explained in the Excel model you receive alongside it.

Owners rarely go on to ask us to sell their business after a valuation, although it has happened. Most come to us for the reason this page exists. They want a number they can trust before someone else tells them what it is.

Who does the work

Who does the work, and what a valuation finds

Mark Ross Roberts FMVA CBCA carries out every valuation himself, with 30 years on the deal side of UK mid-market transactions. The largest corporate group he has negotiated against had a turnover of £3.2bn.

96%
In 96% of completed Achieve mandates, the price agreed at heads of terms is the price paid at completion.
Source: Achieve Corporation mandate records

The two summaries below show the kind of finding a valuation produces. They are examples written for this page, not records of real mandates, and they carry that label on the website until real anonymised deals replace them.

Illustrative example

Managed IT and cyber security provider, Yorkshire

Turnover: £6m
Buyer: A private equity-backed MSP consolidator
What the valuation found: The offer applied one multiple to total EBITDA. The valuation split gross margin by revenue line and showed that the managed security service, billed as a contracted monthly fee per endpoint, earned well above the margin on the support desk. The buyer's price had valued those security contracts as though they were licence resale.
Outcome: The owner went back with his own evidence before heads of terms.

Illustrative example

IT support for professional services firms, South East

Turnover: £3m
Buyer: The management team, backed by bank debt
What the valuation found: Several client agreements had drifted onto rolling monthly terms after their original terms expired, and one engineer held most of the knowledge of the older client networks. The valuation showed how little of the revenue was committed under contract, and what a lender would advance against what was left.
Outcome: The owner re-papered the main contracts onto fixed terms before the deal, and agreed part of the price as deferred consideration the team could fund.

Sector insight

What buyers pay for in IT managed services

Buyers pay a multiple on income they can see repeating without the owner. In an MSP that means contracted monthly fees, and most of due diligence is spent working out how much of your revenue really is that.

Contracted monthly recurring revenue. Per-user or per-device support agreements, billed monthly on fixed terms, are what the buyer is paying for. Licence resale and hardware often run through the same invoices, but they carry thin margins and no commitment, and buyers price them separately.
Contracts that hold clients in place. A fixed initial term, auto-renewal and a notice period long enough to matter. Agreements that lapsed into month-to-month terms years ago are recurring by habit, and a buyer's lawyers will read them that way.
Gross margin per user or per endpoint that holds as clients grow. Adding seats to an existing client should add margin. Where each new client needs another engineer, the buyer sees a staffing business with a service desk attached.
Managed security services. Security monitoring, endpoint detection and response and compliance work sold as a monthly service attract more buyer interest than break-fix support. Client demand is there: 43% of UK businesses reported a cyber breach or attack in the previous twelve months, and 62% of small businesses had an external cyber security provider, up from 56% a year earlier (DSIT, Cyber Security Breaches Survey 2025).
A service desk that runs without the founder. A service delivery manager, a technical lead and documented runbooks, so that client escalations stop somewhere other than the owner's mobile.

What pulls the value down

The discounts in IT services are predictable. Consolidators apply them because each one has cost them money on an earlier acquisition.

Resale margin presented as recurring revenue. Microsoft licences and software subscriptions bill monthly, so owners count them as recurring. Buyers strip them out, value them well below managed services income, and work back to the price from there.
Licensing margin that Microsoft controls. Microsoft sets the prices and the partner terms, and changes them. Since April 2025, annual subscriptions billed monthly have cost 5% more than paying upfront, and the same 5% uplift reached annual-term CSP software subscriptions in October 2026. Microsoft 365 suite prices went up as well, from July 2026 (Microsoft Partner Center announcements, 2025 and 2026). Each change lands on your margin or your client's invoice, and buyers ask which.
One client, or one client sector, carrying the revenue. Buyers price the risk of losing a dominant account. Where it dominates turnover, part of the price is often deferred until that client renews.
The owner is still the senior engineer. If the owner holds the admin credentials, the key client relationships and the only memory of how the oldest networks were built, a buyer assumes some revenue leaves with him and writes an earn-out to cover it.
A client base still running its own servers. On-premise estates bring project work now and migration risk later. A client book already in Microsoft 365 and Azure is easier for a consolidator to absorb.
Cyber regulation going through Parliament. The Cyber Security and Resilience Bill would bring managed service providers that are not small or micro enterprises under the Information Commission, with registration and incident reporting duties. In October 2026 it was at Report stage in the House of Lords and not yet law (UK Parliament; DSIT, 2026). Buyers already ask whether a target could comply.

Most of these can be fixed, or at least evidenced, given twelve months' notice. Lapsed agreements can be re-papered onto fixed terms with auto-renewal, and Microsoft resale moved onto its own line in the management accounts. A valuation done a year out shows which of them a consolidator would find in your business, and roughly what each would take off the price.

Method

How we value an IT managed services business, and why the multiple comes last

Anyone can take a year's EBITDA from the filed accounts, or a year's monthly recurring revenue, and multiply it by a figure someone quoted at a vendor event or on an MSP forum. A consolidator's advisers will not price your business that way, and neither do we. We set the multiple last. It comes out of the work below, which reads your client contracts and splits resale from managed services, so it differs for every MSP and we do not publish a typical range.

Before any multiple goes near your EBITDA, we test the MSP on:

Its defensible moat. What stops a client moving to a cheaper provider at renewal? Contract terms and notice periods, how deeply the service is built into the client's systems, and sector knowledge such as legal or healthcare compliance.
The market around it. A PESTLE review of the pressures on its clients and suppliers, such as the cyber regulation proposed in the Cyber Security and Resilience Bill, Microsoft's pricing changes, engineer pay, the move to cloud, and AI tools that change how many people a service desk needs.
Its competitive position. Porter's Five Forces applied to the business itself: the power of Microsoft and the distributors, the buying power of larger clients, low-cost and offshore service desks, vendors selling direct, and rivalry from consolidators with bigger budgets.
Its real competitive edge. The specific reason clients stay, and whether that reason survives the owner stepping back from the escalations and the quarterly account reviews.
Capital expenditure. Remote monitoring and PSA platforms, the security stack, any hosting or data centre kit, and what must be spent on them to make the forecast achievable.
Frameworks and contracts. Managed service agreements, public sector framework listings and vendor partner tiers, and how much of next year's revenue sits under contracts the client cannot leave before it is earned.
Quality of earnings. Whether profits before a sale were flattered by holding back hiring, training or tooling spend, by a one-off refresh project, or by capitalising internal development. A stretched service desk shows up in ticket backlogs and lost clients, and buyers ask for both.

Only then do we value the business three ways: on maintainable earnings once resale and one-off projects are separated out, on a discounted cash flow of its own forecast of seat growth and engineer hiring, and on the net value of its assets, which for most MSPs looks thin once deferred income is counted. Where the methods disagree, the gap shows where a consolidator will push, usually on client churn or on how much revenue is really under contract.

On published multiples. BDO's Private Company Price Index put the median UK trade buyer multiple at 9.8 times EBITDA in Q3 2024, and 12.2 times for private equity (BDO, PCPI Q3 2024). Over the previous four years, the trade deals behind that index averaged an enterprise value of £14.5m (BDO, PCPI Q1 2024). An index pooling engineering firms, retailers and software houses cannot tell a buyer whether your monthly invoices are support contracts or Microsoft licences passed through at thin margin. For an MSP it serves only as one cross-check against the result of the work above.

We value businesses up to £450m enterprise value. The fixed fees below cover businesses with turnover from £500k to £30m, and larger businesses are scoped on the discovery call.

The accounts

Where IT managed services accounts mislead

An MSP's filed accounts are drawn up for Companies House and rarely separate contracted support from licence resale the way a consolidator's due diligence team will. We make that split before a buyer does it for you.

One turnover line for everything. Managed services, licence resale, hardware and projects are often reported as a single figure. The blended gross margin hides how much of the profit comes from contracted support.
Deferred income. Support billed annually or quarterly in advance swells the cash balance at the year end. Buyers usually treat the unearned part as debt-like, because they must deliver the service without being paid for it again.
Capitalised development and tooling. Some MSPs capitalise the cost of building a client portal, automation scripts or a hosting platform, which flatters EBITDA. A buyer reverses it and asks how often the spend recurs.
Vendor rebates and incentives. Microsoft, distributor and security vendor incentives can be material, and many depend on partner tier and annual targets. We show earnings with and without them.
Project profit in the wrong year. Migration and refresh projects billed on milestones can land profit in the year before a sale. We test the timing against the work done.

The offer

The valuation, the fee and how to start

You receive a valuation memorandum, a written report and a locked Excel model, delivered in 2 working days. Mark Ross Roberts FMVA CBCA does the work himself. Nothing is passed to a junior analyst.

Annual turnover	Independent valuation	With funding feasibility
£500k to £5m	£1,200	£1,700
£5m to £10m	£2,000	£2,500
£10m to £30m	£3,000	£3,500
Above £30m	Scoped on the call	Scoped on the call

All fees exclude VAT. Funding feasibility adds the bank debt a lender is likely to advance against the business and tests deal structures on debt service cover, which matters if your management team wants to buy or you plan to acquire a smaller MSP yourself.

How to start: email Mark at mark@achieve-corporation.com with a line on the business and what the valuation is for. You get a reply the same day, then a free discovery call that confirms the right report, the fee and the turnaround. Nothing is payable until you agree to go ahead.

Email Mark for a free discovery call

Questions owners ask

Frequently asked questions

I've had an offer for my MSP. How do I know if it's fair?

Compare it with an independent valuation built from your accounts and your PSA billing data, before you reply. The valuation shows what a consolidator is likely to pay once resale is separated from managed services, how much of the headline reaches you after deferred income and net debt, and which parts of the offer, including any earn-out tied to client retention, are open to negotiation.

Is an independent valuation worth it if I already have a broker's figure?

A broker's figure is often given to win your instruction, and the quickest way to inflate an MSP figure is to treat licence resale as recurring revenue. An independent valuation has no stake in the number, splits your revenue line by line and gives you something to test the broker's figure against. At a fixed fee from £1,200 excluding VAT, it costs less than one point off the multiple on almost any MSP sale.

Will you try to sell me a sale mandate afterwards?

No. The valuation is a standalone engagement at a fixed fee agreed up front, and the fee is the same whatever the number. The report is yours to show a consolidator or anyone else. Achieve does advise on sales, and owners rarely go on to instruct us to sell their MSP after a valuation, although it has happened. You are under no obligation to instruct us for anything else. Most MSP owners use the report to answer a buyer who has already called, or to decide whether to keep adding seats for a few more years first.

How much is my IT managed services business worth?

There is no reliable rule of thumb, whatever you have heard about multiples of recurring revenue. The value depends on how much of your income is contracted monthly fees, the terms and notice periods behind them, gross margin per user, how many clients you lose each year, and whether the business runs without you. A multiple of EBITDA comes at the end of that work, followed by deductions for deferred income, debt and working capital at completion. Published averages pool larger businesses from every sector and cannot see how your revenue splits between support contracts and resale.

Do buyers pay for my hardware and licence resale?

They pay for the profit, but rarely at the multiple they apply to managed services. Resale is low-margin and uncommitted, so buyers separate it and value it lower. Reporting it on its own line in your management accounts shortens that argument.

Why would deferred income come off the price?

Clients who paid in advance are owed support the buyer will have to deliver without further payment. Most buyers treat that obligation as debt-like in a cash-free, debt-free deal, so the cash it brought in does not all reach you.

Will there be an earn-out?

Often, yes. Part of an MSP's price is commonly deferred or tied to performance after completion, usually client retention or recurring revenue. The valuation shows how much of the price is at risk and which terms are worth pushing on.

Does a managed security service increase the value?

Yes, where it is contracted monthly and earns its own margin. A security service billed as a monthly fee with its own margin is valued differently from occasional penetration tests resold from a partner.

How long does a valuation take?

Two working days once we have your accounts, management information and a summary of your client contracts, ideally with a PSA export showing billing by client. The fee is fixed and agreed before work starts.

Is the valuation confidential?

Yes. An NDA is available before you share any figures, and your staff, clients and vendors are not contacted.

Sources:

Valuation guides: EBITDA analysis · Earnings multiples · Asset-based valuation · Discounted cash flow

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