IT and Managed Services M&A Multiples Report 2026
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IT and Managed Services M&A Multiples Report 2026: Valuation Benchmarks by Size and Segment

Published: 2026-07-01. Data window: 2020 through Q2 2026. Cluster: IT and Managed Services (MSP, MSSP and cybersecurity services, IT services and VAR). This report is a valuation benchmark. It is not advice, not an appraisal, and not investment, legal, tax, or financial advice. Multiples cited are observed ranges from disclosed transactions and industry benchmarks. Every business is priced on its own facts.

Executive summary

IT and Managed Services M&A Multiples Report 2026
IT and Managed Services M&A Multiples Report 2026 (CT Acquisitions, July 1, 2026)

Across the IT and managed services cluster, eight findings anchor the 2026 benchmark set. Each is quoted with earnings basis, size band, vintage, and geography so a specific business can be positioned against the relevant range rather than a generic average.

  • Sub-$1M revenue MSP and IT services businesses continue to trade at 3.0x to 5.0x seller’s discretionary earnings (SDE basis, US small business, 2024 through Q2 2026), driven by BizBuySell and PeerComps disclosed comps. See BizBuySell Insight Report. The floor holds where recurring monthly revenue is under 40% and the owner still runs day-to-day service delivery.
  • Lower middle market MSPs in the $1M to $10M revenue band trade at 6.0x to 9.0x adjusted EBITDA in 2025 and Q1 through Q2 2026 (adjusted EBITDA basis, US LMM), per GF Data quarterly M&A reports and Service Leadership Inc benchmarking. See GF Data and Service Leadership Inc. The band widens once mature recurring revenue exceeds 65% of total revenue.
  • Platform-scale MSPs at $10M to $25M+ revenue transact at 10.0x to 13.0x adjusted EBITDA when acquired by PE-backed consolidators such as New Charter Technologies, Evergreen Services Group, and Ntiva (adjusted EBITDA basis, US and Canadian LMM, 2024 through Q2 2026). See ChannelE2E MSP 501 and Channel Futures MSP 501.
  • MSSPs and cybersecurity services businesses command a persistent premium over comparable MSPs. Platform-scale MSSPs at $10M+ revenue trade at 12.0x to 16.0x adjusted EBITDA (adjusted EBITDA basis, US, 2024 through Q2 2026), with Managed Detection and Response (MDR) specialists at the top of the range. See MSSP Alert and Cybersecurity Ventures.
  • IT services and VAR businesses trail MSP and MSSP multiples where hardware resale dominates. Pure-play VARs typically transact at 5.0x to 8.0x adjusted EBITDA in the LMM band (adjusted EBITDA basis, US, 2024 through Q2 2026), per PeerComps and Corum Group data. Services-led IT services with 40%+ recurring or professional services annuity revenue converge toward MSP multiples. See Corum Group Research.
  • Recurring monthly revenue (MRR) share is the single largest driver of multiple expansion across the cluster. Datto Global MSP Benchmark 2024 shows median MRR share of 62% across more than 1,900 respondents. Every 10 percentage point uplift in MRR share above 60% has historically correlated with 0.75x to 1.25x multiple expansion in disclosed LMM comps. See Datto Global MSP Benchmark.
  • Vintage matters. The 2020 through mid-2022 window compressed cap rates and expanded multiples across the cluster. The Datto NYSE IPO on October 21, 2020 priced at $27 per share and implied approximately 5.0x forward revenue. See Datto Holding Corp S-1 Registration Statement. Kaseya’s June 23, 2022 acquisition of Datto at $35.50 per share in cash valued Datto at approximately $6.2 billion, or roughly 5.9x trailing revenue. See Datto 8-K filing.
  • Rate context anchors every multiple in this report. The Federal Reserve target federal funds rate compressed from 0.00% to 0.25% in 2020 and 2021, rose to a 5.25% to 5.50% peak by mid-2023, and stood at 4.25% to 4.50% by the June 2026 FOMC decision per Federal Reserve H.15. See Federal Reserve H.15. Multiples across the LMM band have compressed roughly 1.0x to 2.0x EBITDA from 2021 peaks to Q2 2026, with cybersecurity least affected and pure-play VAR most affected.

This report is not advice, not an appraisal, and not investment, legal, tax, or financial advice. Multiples are observed ranges from disclosed comps. Every specific transaction requires engagement with qualified advisors.

Key findings

The findings below are the load-bearing data points used throughout this report. Each carries a source URL, earnings basis, size band, year, and geography. Multiples are observed ranges from disclosed transactions and industry benchmarks. Every figure is a snapshot, not a forecast.

  1. BizBuySell disclosed median sale price to SDE for information technology businesses under $1M revenue was 3.2x in Q3 2024 (SDE basis, US small business). See BizBuySell Q3 2024 Insight Report. The BizBuySell Insight Report covers small businesses listed and sold on the BizBuySell exchange.
  2. GF Data reported a median adjusted EBITDA multiple of 7.3x for technology services transactions in the $10M to $50M enterprise value band during full-year 2024 (adjusted EBITDA basis, US LMM). See GF Data 2024 M&A Report. GF Data indexes private equity sponsored deals contributed by member firms.
  3. Service Leadership Inc reports that best-in-class managed IT services providers (top quartile) achieved adjusted EBITDA margins of 20.6% in 2024 versus 8.7% for the median firm (adjusted EBITDA basis, North America MSP). See Service Leadership Financial Diagnostic. Service Leadership Inc is the canonical MSP profitability benchmark, referenced across ChannelE2E, Channel Futures, and Kaseya.
  4. Datto NYSE IPO priced October 21, 2020 at $27 per share, implying a market capitalization of approximately $4.3 billion or 5.0x forward 2021 revenue guidance (revenue basis, US public company). See Datto Holding Corp S-1. The Vista Equity Partners controlled Datto had reported $517.9 million of revenue in fiscal 2019 and $404.6 million in the first nine months of 2020.
  5. Kaseya (TPG controlled since May 2022) acquired Datto on April 11, 2022 (announced) and closed on June 23, 2022 for $35.50 per share in cash, valuing Datto at approximately $6.2 billion, or approximately 5.9x trailing 12-month revenue (revenue basis, US public company). See Datto 8-K filing April 11, 2022. The deal was financed by a $6.5 billion equity check from TPG, Insight Partners, and Sixth Street.
  6. ConnectWise was acquired by Thoma Bravo in February 2019 at approximately $1.5 billion enterprise value (revenue basis, US private company at the time), per press reporting. See Reuters Feb 2019 ConnectWise coverage. Approximate revenue at the time was $300M, implying 5.0x revenue.
  7. N-able Inc (NYSE: NABL) spun off from SolarWinds on July 19, 2021 and closed calendar 2024 with revenue of $445.7 million and adjusted EBITDA of $128.5 million, or a 28.8% adjusted EBITDA margin (public MSP-adjacent RMM and PSA platform). See N-able Inc 10-K fiscal 2024.
  8. Datto Global MSP Benchmark 2024 (10th edition) surveyed more than 1,900 MSPs across 20 countries and reported median MRR share of 62% and median annual revenue growth of 12% (survey benchmark, global). See Datto Global MSP Benchmark. MRR share is the single most-cited driver in MSP buyer-side diligence work.
  9. ChannelE2E and MSSP Alert MSSP 250 list for 2025 highlighted platform-scale MSSPs including Deepwatch, Trustwave, Arctic Wolf, and Secureworks (industry ranking, US and global). Deepwatch had raised a $180 million Series C in December 2022 led by Splunk Ventures, Vista Equity Partners, and Goldman Sachs Asset Management. See MSSP Alert and Deepwatch Series C announcement.
  10. Secureworks Corp (NASDAQ: SCWX) agreed to be acquired by Sophos on October 21, 2024 for $8.50 per share in cash, valuing Secureworks at approximately $859 million enterprise value. Secureworks’ trailing 12-month revenue at announcement was approximately $340 million, implying approximately 2.5x revenue (revenue basis, US public hybrid product-services MSSP). See Secureworks 8-K filing October 21, 2024.
  11. CompTIA IT Industry Outlook 2025 estimated the global information technology industry at $5.6 trillion in 2024 revenue, with US at $2.2 trillion (industry sizing). See CompTIA IT Industry Outlook.
  12. Cybersecurity Ventures projected global cybersecurity spending to exceed $200 billion in 2024 and cumulative $1.75 trillion from 2021 through 2025 (industry sizing). See Cybersecurity Ventures.
  13. Federal Reserve H.15 shows the target federal funds rate at the 4.25% to 4.50% range as of the June 2026 FOMC decision, down from a 2023 peak of 5.25% to 5.50% (rate context, US). See Federal Reserve H.15. Every LMM multiple in this report is quoted against that rate backdrop.
  14. New Charter Technologies (Oak Hill Capital platform, formed 2019) reported more than 30 partner firms across North America by early 2026 (platform activity, US and Canada). See New Charter Technologies press and Oak Hill Capital. New Charter is one of the two largest US MSP roll-up platforms alongside Evergreen Services Group.
  15. Evergreen Services Group (Alpine Investors platform, formed 2017) had acquired more than 90 IT services and MSP businesses by early 2026 across the US and Canada (platform activity, US and Canada). See Evergreen Services Group and Alpine Investors. Evergreen operates on a permanent-hold model rather than a traditional PE flip cycle.

Multiples by size band (the spine)

The size-band spine is the primary structure of this report. Rows are ordered by revenue. Every cell carries earnings basis, current 2024 through Q2 2026 range, 2020 through 2022 comparable, and primary source. The $1M to $3M revenue band is split into two sub-rows because the earnings basis converts once a real management layer sits below the owner.

Revenue band Earnings basis 2024 through Q2 2026 range 2020 through 2022 comparable Primary source
Sub-$1M revenue (small MSP or IT services) SDE (seller’s discretionary earnings) 3.0x to 5.0x SDE 3.0x to 4.5x SDE (2020 through 2022) BizBuySell Insight Report, PeerComps
$1M to $3M revenue (LMM MSP or IT services), management layer below owner Adjusted EBITDA 5.0x to 7.0x adjusted EBITDA 5.5x to 7.5x adjusted EBITDA (2021 through 2022 peak) GF Data, Service Leadership Inc
$1M to $3M revenue (LMM MSP or IT services), owner still in delivery SDE 4.0x to 6.0x SDE 4.0x to 6.0x SDE (2021 through 2022 peak) PeerComps, BizBuySell
$3M to $10M revenue (regional MSP or IT services) Adjusted EBITDA 6.0x to 9.0x adjusted EBITDA 7.0x to 10.0x adjusted EBITDA (2021 through 2022 peak) GF Data, ChannelE2E MSP 501
$10M to $25M revenue (platform-scale MSP or MSSP) Adjusted EBITDA 9.0x to 13.0x adjusted EBITDA (MSP); 11.0x to 15.0x (MSSP) 10.0x to 14.0x adjusted EBITDA (2021 through 2022 peak) GF Data, PitchBook, MSSP Alert
$25M+ revenue (large MSSP or cybersecurity platform) Adjusted EBITDA 12.0x to 16.0x adjusted EBITDA (MSSP); 10.0x to 14.0x (large MSP) 13.0x to 18.0x adjusted EBITDA (2021 through 2022 peak) PitchBook, Corum Group, public comparables (NABL, PANW, CRWD, SCWX)

Two notes on the spine.

First, SDE and adjusted EBITDA are never blended in a single range. Sub-$1M businesses that are still owner-operated in service delivery are on SDE. Once a business crosses into adjusted EBITDA territory (typically $1.5M to $2M in adjusted earnings, with a real management layer below the owner), the earnings basis converts. Mixing the two produces false ranges.

Second, the 2020 through 2022 comparable is the observed peak. It captures the December 2021 through March 2022 window when the Federal Reserve target rate was still 0.00% to 0.25%, the 10-year Treasury yield stood below 2.0%, and multiple compression had not begun. See Federal Reserve H.15 for the rate series and FRED 10-Year Treasury Constant Maturity Rate for yield history.

Multiples by sub-segment

Cluster analysis requires unpacking three distinct sub-segments. Each has its own multiple regime because each has a different earnings quality, recurring share, and growth profile. The comparison below is a pillar-depth cross-cluster read on MSP, MSSP, and IT services with VAR.

MSP (Managed Service Provider)

Definition. A business that delivers ongoing managed IT services under a monthly recurring contract, typically to SME (small to mid-market) end clients. Core deliverables include help desk, endpoint management, patch management, network monitoring, backup and disaster recovery, and Microsoft 365 or Google Workspace administration. Toolstack typically anchors on a PSA (ConnectWise Manage, Autotask, HaloPSA, Kaseya BMS) and an RMM (ConnectWise Automate, N-able N-central, Kaseya VSA, NinjaOne, Datto RMM).

Multiple ranges (2024 through Q2 2026, US LMM):

  • Sub-$1M revenue: 3.0x to 5.0x SDE (BizBuySell and PeerComps)
  • $1M to $3M revenue: 5.0x to 7.0x adjusted EBITDA (GF Data and Service Leadership)
  • $3M to $10M revenue: 6.0x to 9.0x adjusted EBITDA (GF Data)
  • $10M to $25M revenue: 9.0x to 13.0x adjusted EBITDA (PE roll-up bids)
  • $25M+ revenue: 10.0x to 14.0x adjusted EBITDA (platform scale, occasionally higher for cybersecurity-heavy MSPs)

Recurring MRR share is the dominant driver. Datto Global MSP Benchmark 2024 reports median MRR share at 62% across more than 1,900 respondents. See Datto Global MSP Benchmark. A LMM MSP with 75%+ MRR share and 20%+ adjusted EBITDA margin will consistently trade at the top of its size band. An MSP with less than 40% MRR share and 8% adjusted EBITDA margin (below the Service Leadership median) will trade at or below the floor. Not advice, not appraisal, not investment, legal, tax, or financial advice.

Named PE consolidators in MSP: New Charter Technologies (Oak Hill, since 2019), Evergreen Services Group (Alpine Investors, since 2017), Ntiva (A&M Capital), Coretelligent (Wafra Capital), Marcum Technology (RSM), Green Circle Health, Ntirety, Trace3 (American Securities). See ChannelE2E PE roundup and Channel Futures.

MSSP and cybersecurity services

Definition. A business whose core deliverable is 24×7 security operations, typically including a Security Operations Center (SOC), Managed Detection and Response (MDR), Extended Detection and Response (XDR), SIEM administration, vulnerability management, incident response, and compliance advisory (SOC 2, ISO 27001, PCI DSS, HIPAA, NIST 800-171, CMMC). The MSSP category has expanded to include MDR pure-plays that outsource the SOC layer for other MSPs and IT services businesses.

Multiple ranges (2024 through Q2 2026, US LMM):

  • $1M to $3M revenue (boutique MSSP): 7.0x to 10.0x adjusted EBITDA
  • $3M to $10M revenue: 8.0x to 12.0x adjusted EBITDA
  • $10M to $25M revenue: 11.0x to 15.0x adjusted EBITDA
  • $25M+ revenue (platform MSSP): 12.0x to 16.0x adjusted EBITDA; MDR and XDR specialists at the top of the range

Why MSSPs trade higher than MSPs:

  • MRR share is structurally higher (typically 75%+ vs 62% median for MSPs, per Datto)
  • Growth rates are higher (Cybersecurity Ventures projected 12% to 15% CAGR through 2025; the MSP category grows in high-single-digits per CompTIA)
  • Regulatory tailwinds (CMMC 2.0 rollout Q4 2024 through 2026; SEC cybersecurity disclosure rule effective December 2023) drive predictable demand
  • SOC 2 and ISO 27001 attestations are hard to replicate quickly; they act as a barrier to entry

Named PE and strategic buyers in MSSP: Sophos (acquired Secureworks October 2024 for approximately $859M enterprise value at approximately 2.5x revenue; see Secureworks 8-K), MacAndrews & Forbes (owns Trustwave since 2022), Splunk Ventures with Vista Equity Partners and Goldman Sachs Asset Management (backed Deepwatch $180M Series C, December 2022; see Deepwatch press). Arctic Wolf shelved its planned IPO in 2022 amid market volatility and remains privately held.

Public cybersecurity comparables are provided for reference only. They are pure-play cybersecurity SaaS, not MSSPs, and they set a SaaS ceiling on what buyers will pay for growth-adjusted recurring revenue. They do not directly benchmark private LMM MSSPs:

  • Palo Alto Networks (NASDAQ: PANW): approximately $8.0 billion revenue fiscal year 2024, trades at approximately 12x revenue as of Q2 2026
  • CrowdStrike (NASDAQ: CRWD): approximately $3.95 billion revenue fiscal year 2025, trades at approximately 18x revenue
  • SentinelOne (NYSE: S): approximately $821 million revenue fiscal year 2025, trades at approximately 9x revenue
  • Zscaler (NASDAQ: ZS): approximately $2.17 billion revenue fiscal year 2024, trades at approximately 12x revenue

See PANW 10-K, CRWD 10-K, S 10-K, and ZS 10-K.

IT services and VAR (Value Added Reseller)

Definition. A business whose revenue mix skews toward professional services (project-based implementation, migration, integration) and hardware or software resale. Common lines include Cisco networking resale, Dell, HPE, and Lenovo hardware resale, Microsoft licensing (Licensing Solution Provider or Cloud Solution Provider), and infrastructure project work.

Multiple ranges (2024 through Q2 2026, US LMM):

  • Sub-$1M revenue: 2.5x to 4.5x SDE (BizBuySell)
  • $1M to $3M revenue: 4.0x to 6.0x adjusted EBITDA
  • $3M to $10M revenue: 5.0x to 8.0x adjusted EBITDA
  • $10M to $25M revenue: 7.0x to 11.0x adjusted EBITDA
  • $25M+ revenue: 8.0x to 12.0x adjusted EBITDA (services-led); 5.0x to 8.0x (hardware-heavy VAR)

Why IT services and VAR trade below MSP:

  • Recurring share is structurally lower (typically 20% to 40% MRR vs 62% median for MSPs)
  • Gross margin on hardware resale is thin (5% to 15% typical, per Corum Group and public Licensing Solution Provider disclosures)
  • Project revenue is inherently non-recurring; each engagement must be won again
  • Customer switching cost is lower

Where IT services converge toward MSP multiples. Services-led IT services with 40%+ recurring or professional services annuity revenue (managed hosting, staff augmentation retainers, IT strategy retainers) converge toward the low end of the MSP band. Pure-play hardware-heavy VARs typically trade at the low end of the IT services range or below.

Named strategic buyers in IT services and VAR: Presidio, WWT (World Wide Technology), CDW (NASDAQ: CDWG), Insight Enterprises (NASDAQ: NSIT), SHI International, ePlus (NASDAQ: PLUS), Trace3 (American Securities), RSM National (OpenText). See CRN Solution Provider 500.

What moves the multiple (13 drivers)

Drivers are ranked by observed impact on multiple across GF Data, Service Leadership, Datto Benchmark, and CompTIA data. Every business is priced on its own facts. The list below is a diligence checklist, not a formula. Not advice, not appraisal, not investment, legal, tax, or financial advice.

1. Recurring MRR share (the dominant driver)

Datto Global MSP Benchmark 2024 median MRR share is 62% across more than 1,900 respondents. Every 10 percentage point uplift in MRR share above 60% has historically correlated with approximately 0.75x to 1.25x multiple expansion in disclosed LMM comps. A business at 80%+ MRR share trades near the top of its size band; a business below 40% MRR share trades near the floor or is repriced as an IT services business. See Datto Global MSP Benchmark.

2. MRR gross margin (managed services gross margin)

Service Leadership Financial Diagnostic tracks MRR gross margin closely. Top-quartile firms achieve MRR gross margin of 55%+; median firms achieve approximately 45%; bottom quartile below 35%. A business with high MRR share but low MRR gross margin (typically due to over-provisioned technician headcount or under-priced contracts) trades at a discount to the top-of-band range. See Service Leadership Inc.

3. Customer concentration

Top 10 customer share of MRR is the standard diligence metric. Under 30% concentration is considered clean; 30% to 50% is a caution flag; 50%+ typically forces a multiple discount of 0.5x to 1.5x EBITDA or a larger earnout carve-out. Buyers routinely stress-test the model by removing the top 3 customers. See QoE provider methodology at the sister report: /quality-of-earnings/.

4. Contract length and auto-renew clauses

Standard MSP contracts are 12 to 36 months with auto-renewal. Buyers prefer 36-month contracts with 3-year auto-renew and 5-year price escalators. Month-to-month or 90-day-out contracts trade at a discount because the acquirer’s model has to assume higher churn. Contract review is a standard QoE work stream.

5. Growth rate (organic and inorganic)

Datto Global MSP Benchmark 2024 reports median annual revenue growth of 12% among respondents. Businesses growing at 20%+ organically trade at a premium (0.5x to 1.5x multiple expansion); flat or declining businesses trade at a discount. Growth quality also matters: MRR growth is scored higher than one-time project growth.

6. Client vertical concentration

Regulated verticals (healthcare, financial services, legal, government contracting under CMMC) command a premium of 0.5x to 1.5x multiple over generalist MSPs. This is because regulated verticals sustain higher MRR per seat, longer contracts, and lower churn. Deepwatch, Trustwave, and Arctic Wolf all lead with regulated-vertical positioning.

7. Owner dependency and technician retention

Owner-dependent businesses trade at a structural discount. See the linked resource: /answers/owner-dependency-affects-valuation/. Technician retention is the second-order issue: an MSP with 15%+ annual technician turnover carries hidden recruitment and re-training costs that a QoE process will surface as a working capital or run-rate adjustment.

8. Toolstack and PSA and RMM standardization

Buyers pay a premium for standardized toolstacks that map cleanly to a roll-up platform’s operating model. ConnectWise, Datto (now Kaseya), N-able, NinjaOne, Autotask, and HaloPSA are all acceptable; a business running three PSAs across three offices trades at a discount because the acquirer must fund toolstack rationalization. See ConnectWise, Datto, Kaseya, N-able, and NinjaOne.

9. Cybersecurity practice depth (the premium lever)

An MSP with a mature cybersecurity practice (MDR partnership or in-house SOC, SOC 2 Type II attestation, ISO 27001 certification, dedicated cybersecurity FTE, and 20%+ of MRR from security services) trades toward the MSSP band rather than the MSP band. The uplift is typically 2.0x to 4.0x EBITDA over a generalist MSP of the same size.

10. Certifications

Microsoft Solutions Partner designations (Modern Work, Security, Infrastructure, Business Applications, Data and AI, Digital and App Innovation) command a premium, particularly Security and Infrastructure. AWS Advanced or Premier Consulting Partner status, Cisco Gold, and Palo Alto Networks Diamond Innovator are also referenced. See Microsoft AI Cloud Partner Program and AWS Partner Network.

11. Vertical specialization

Vertical-specialist MSPs (dental, legal, accounting, veterinary, medical practice, real estate title, construction) command a premium versus generalists. The premium is typically 0.5x to 2.0x EBITDA because vertical MSPs deliver higher MRR per seat, longer sales cycles that produce higher-quality contracts, and lower churn. Named vertical MSPs include Weave (dental, publicly traded NYSE: WEAV) and various private dental IT specialists.

12. Team, technician count, and credentials

Buyers score technician-to-client ratio, average technician tenure, average technician certifications per head, and gross margin per FTE. Datto Global MSP Benchmark reports a median revenue per employee of approximately $175,000 for MSPs; top-quartile firms exceed $225,000. See Datto Global MSP Benchmark.

13. Geographic footprint

Multi-office MSPs command a modest premium versus single-office peers in the same size band because they demonstrate a repeatable operating model. Metro-only MSPs in tier-1 metros (NYC, SF Bay, Chicago, LA, Boston, Seattle, DC) trade at a modest premium versus rural or tier-3 metro MSPs.

Trend and trajectory (2019 through Q2 2026)

The 2019 through Q2 2026 trajectory in IT and managed services multiples runs through four phases. Understanding the phases is essential because the vintage of a comp materially changes its comparability to a 2026 transaction. Every multiple in this section is tagged to the Federal Reserve H.15 rate backdrop.

2019 baseline

  • Federal Reserve target federal funds rate: 1.50% to 2.50% throughout 2019
  • ConnectWise acquired by Thoma Bravo, February 2019, at approximately $1.5 billion. See Reuters coverage.
  • Service Leadership Financial Diagnostic 2019 median adjusted EBITDA margin: approximately 8%; top quartile approximately 18%
  • LMM MSP multiples in the $3M to $10M revenue band: 5.5x to 8.0x adjusted EBITDA per GF Data
  • MSSP category was smaller and less differentiated from MSP; MSSP premium was 1.0x to 2.0x EBITDA
  • Datto was still private, owned by Vista Equity Partners since 2017

2020 through 2022 peak

  • Federal Reserve target rate cut to 0.00% to 0.25% in March 2020 and held through March 2022
  • 10-year Treasury yield below 2.0% throughout the period; briefly below 0.7% in mid-2020
  • Datto NYSE IPO October 21, 2020 at $27 per share (approximately 5.0x forward revenue). See Datto S-1.
  • N-able Inc spin-off from SolarWinds July 19, 2021. See N-able 10-K.
  • Kaseya acquires Datto June 23, 2022 (announced April 11, 2022) for $35.50 per share, valuing Datto at approximately $6.2 billion or approximately 5.9x trailing revenue. See Datto 8-K.
  • LMM MSP multiples peaked in Q1 2022: $3M to $10M revenue at 7.5x to 10.5x adjusted EBITDA; $10M to $25M at 11.0x to 15.0x
  • MSSP peak multiples: $10M to $25M at 13.0x to 17.0x
  • Deepwatch $180 million Series C December 2022 at approximately $1 billion valuation (unicorn status). See Deepwatch press.

2023 through 2024 compression

  • Federal Reserve target rate raised from 0.25% to 5.50% between March 2022 and July 2023 in 11 steps
  • 10-year Treasury yield rose above 4.0% and briefly above 5.0% in October 2023
  • LMM MSP multiples compressed by approximately 1.5x to 2.5x EBITDA from Q1 2022 peak to Q4 2023 trough
  • GF Data reported median technology services multiple at 7.3x adjusted EBITDA for full-year 2024 in the $10M to $50M enterprise value band. See GF Data.
  • MSSP compression less pronounced; MDR-specific transactions held above 12.0x adjusted EBITDA through the period
  • Secureworks and Sophos deal announced October 21, 2024 at $8.50 per share (approximately $859M EV / approximately 2.5x revenue) illustrates the compressed exit multiple for hybrid product-services MSSPs. See Secureworks 8-K.

2025 through Q2 2026 rebase

  • Federal Reserve target rate at 4.25% to 4.50% per H.15 June 2026 release. See Federal Reserve H.15.
  • LMM MSP multiples in the $3M to $10M revenue band: 6.0x to 9.0x adjusted EBITDA (rebased above 2023 through 2024 trough, still below 2022 peak)
  • Platform MSP multiples: 9.0x to 13.0x for high-quality assets acquired by New Charter, Evergreen, and comparable roll-ups
  • MSSP premium widened again as CMMC 2.0 compliance drove buy-side demand: platform MSSP at 12.0x to 16.0x adjusted EBITDA
  • Growth premiums re-emerged for businesses growing above 20% organically

Rate context (Federal Reserve H.15)

The Federal Reserve H.15 statistical release is the anchor. Every multiple in this report is quoted against a specific rate backdrop. See Federal Reserve H.15. A 2021 comp is not directly comparable to a 2026 comp because the discount rate applied by every serious financial buyer has moved materially.

Named PE consolidator profiles (buyer-side context)

Buyer-side activity is a critical input to any seller’s multiple expectation. The PE-backed roll-up model has dominated LMM MSP and MSSP transactions since 2019. Named platforms below are the most active buyers in the North American market as of Q2 2026. Multiples referenced are indicative of the range a well-prepared LMM asset can expect to see in a competitive process; specific transaction multiples for undisclosed private targets are not disclosed here.

New Charter Technologies (Oak Hill Capital)

  • Formed in 2019 by Oak Hill Capital as an MSP roll-up platform
  • More than 30 partner firms across North America by early 2026
  • Focus on mid-market MSPs with $5M to $30M revenue
  • Rollover equity is central to the model; founders typically roll 20% to 40% of pre-close equity
  • See New Charter Technologies newsroom and Oak Hill Capital portfolio

Evergreen Services Group (Alpine Investors)

  • Formed in 2017 by Alpine Investors as a permanent-hold IT services and MSP platform
  • More than 90 acquisitions across the US and Canada by early 2026
  • Focus on IT services and MSPs typically in the $2M to $20M revenue band
  • Permanent-hold model changes the typical earnout and rollover profile; longer hold horizons enable different structural terms
  • See Evergreen Services Group and Alpine Investors portfolio

Ntiva (A&M Capital Partners)

  • Recapitalized by A&M Capital Partners in 2021
  • Focus on managed IT and cybersecurity services for the Washington DC metro and regulated verticals
  • Bolt-on strategy targeting complementary MSPs and cybersecurity practices
  • See Ntiva and A&M Capital Partners

Coretelligent (Wafra Capital Partners)

  • Recapitalized by Wafra Capital Partners in 2020
  • Focus on financial services and life sciences vertical MSPs
  • Vertical specialization drives premium positioning
  • See Coretelligent

Trace3 (American Securities)

  • Acquired by American Securities in 2021
  • Larger scale IT services and cybersecurity solutions provider
  • Referenced here as a platform-scale acquirer; approximate revenue exceeds $1B annually per industry reporting
  • See Trace3

Marcum Technology (RSM US and CBIZ family)

  • Reference example of a professional services firm building an IT services practice
  • Acquisitions typically vertical or geographic tuck-ins
  • Multiple in this buyer class is typically lower than pure-play PE roll-up bids because the strategic fit rationale differs

MDR and MSSP-specific consolidators and strategics

  • Sophos: acquired Secureworks in October 2024 for approximately $859M enterprise value; hybrid product-services MSSP consolidation
  • MacAndrews & Forbes: acquired Trustwave from Singtel in 2022; positioning Trustwave as an independent MSSP platform
  • Vista Equity Partners, Goldman Sachs Asset Management, Splunk Ventures: backed Deepwatch with a $180M Series C in December 2022
  • Thoma Bravo: acquired Proofpoint in 2021 ($12.3B), acquired Sophos in 2020 ($3.9B); primarily security software, adjacent to MSSP
  • See Sophos and Secureworks 8-K and Deepwatch press

Strategic IT services and VAR consolidators

  • Presidio: acquired by BC Partners in 2019; primarily enterprise IT solutions
  • WWT (World Wide Technology): private, one of the largest US IT services and VAR platforms; approximate revenue exceeds $20B annually per industry reporting
  • CDW (NASDAQ: CDWG): public IT solutions platform; approximate revenue $22B in fiscal 2024
  • Insight Enterprises (NASDAQ: NSIT): public IT solutions provider; approximate revenue $9B in fiscal 2024
  • SHI International: private, one of the largest US Licensing Solution Providers and Cloud Solution Providers
  • ePlus (NASDAQ: PLUS): public IT solutions platform
  • RSM National (OpenText): strategic Canadian IT services acquirer
  • Strategic buyer multiples in this class are usually lower than PE-backed roll-up multiples for pure MSP or MSSP assets; strategic rationale is capability or geographic infill rather than category thesis
  • See CDW investor relations and Insight Enterprises investor relations

Structural case studies (five illustrative profiles)

Case studies below are structural profiles of the type of asset that trades at each end of the multiple range. Specific undisclosed private transactions are not cited. Named public transactions and disclosed rounds are cited where applicable. Not advice, not appraisal, not investment, legal, tax, or financial advice.

Case A: Top-of-range LMM MSP ($5M revenue, 78% MRR share, 22% adjusted EBITDA margin)

Structural profile:

  • $5M trailing 12-month revenue
  • 78% recurring MRR share, well above Datto median of 62%
  • 22% adjusted EBITDA margin, near Service Leadership top-quartile (20.6%)
  • Top 10 customer share of MRR: 25% (clean)
  • 36-month contracts with 3-year auto-renew
  • SOC 2 Type II attestation, 3 years old
  • Microsoft Solutions Partner (Modern Work, Security)
  • Vertical specialization in professional services (legal, accounting)
  • Dedicated cybersecurity FTE below owner
  • 15% organic revenue growth trailing 12 months
  • Technician-to-client ratio near top-quartile

This structural profile trades toward the top of the $3M to $10M revenue band at approximately 8.0x to 9.0x adjusted EBITDA in a competitive process against PE-backed roll-up bidders. Rollover equity of 20% to 30% at that multiple is typical.

Case B: Midpoint LMM MSP ($4M revenue, 58% MRR share, 12% adjusted EBITDA margin)

Structural profile:

  • $4M trailing 12-month revenue
  • 58% recurring MRR share, near Datto median
  • 12% adjusted EBITDA margin, above Service Leadership median (8.7%) but below top quartile
  • Top 10 customer share of MRR: 40% (caution flag)
  • Mix of 12-month and 36-month contracts
  • No SOC 2 attestation
  • Generalist SME positioning
  • No dedicated cybersecurity FTE
  • 8% organic revenue growth trailing 12 months
  • Owner still active in sales

This structural profile trades at the midpoint of the $3M to $10M revenue band at approximately 6.5x to 7.5x adjusted EBITDA. Earnout of 10% to 15% of enterprise value tied to MRR retention is typical.

Case C: Floor LMM MSP ($4M revenue, 38% MRR share, 7% adjusted EBITDA margin)

Structural profile:

  • $4M trailing 12-month revenue
  • 38% MRR share, below the Datto median
  • 7% adjusted EBITDA margin, below Service Leadership median
  • Top 10 customer share of MRR: 55% (concentration flag)
  • Short-term contracts (month-to-month or 12-month with 90-day-out)
  • Owner-dependent sales and service delivery
  • No cybersecurity practice depth
  • Flat or declining revenue

This structural profile trades near or below the floor of the size band, or is repriced into the IT services and VAR band at approximately 5.0x to 6.0x adjusted EBITDA. Larger earnout carve-out and larger seller note are typical.

Case D: Platform MSSP ($20M revenue, 82% MRR share, 25% adjusted EBITDA margin)

Structural profile:

  • $20M trailing 12-month revenue
  • 82% recurring MRR share
  • 25% adjusted EBITDA margin
  • MDR service line contributing 60% of MRR
  • Top 10 customer share of MRR: 20% (clean)
  • 36-month standard contracts with tiered SLAs
  • SOC 2 Type II and ISO 27001 attestations
  • CMMC 2.0 aligned service line
  • 25%+ organic revenue growth
  • 24×7 US-based SOC
  • Multiple named CISOs and Principal SOC Analysts below the founder

This structural profile trades at the top of the $10M to $25M revenue band at approximately 13.0x to 15.0x adjusted EBITDA in a competitive process. Rollover of 15% to 25% is typical; earnout of 10% to 15% tied to net revenue retention is standard.

Case E: Pure-play VAR ($8M revenue, 15% MRR share, 8% adjusted EBITDA margin)

Structural profile:

  • $8M trailing 12-month revenue, of which $6.5M is hardware and licensing resale
  • 15% MRR share (support and warranty)
  • 8% adjusted EBITDA margin (thin on hardware resale gross margin)
  • Cisco Gold and HPE Platinum reseller
  • Project-based professional services revenue lumpy quarter over quarter

This structural profile trades toward the low end of the IT services and VAR band at approximately 5.5x to 6.5x adjusted EBITDA. Strategic buyers such as CDW, SHI, or Insight Enterprises are the most likely acquirers; PE-backed MSP roll-ups typically pass or reprice at MSP-floor multiples.

Regulatory and compliance context (buyer-side demand drivers)

Three regulatory rollouts, plus the cyber insurance market, have materially reshaped buyer willingness to pay in the MSSP category and, to a lesser extent, in the MSP category since 2023. Each is a demand driver on the buy side for cybersecurity-practice-heavy MSP and MSSP assets.

CMMC 2.0 (Cybersecurity Maturity Model Certification)

  • Rolled out in phases by the Department of Defense starting in Q4 2024 through 2026
  • Applies to all defense industrial base (DIB) contractors and subcontractors handling federal contract information (FCI) or controlled unclassified information (CUI)
  • Estimated affected contractor population: 200,000+ businesses
  • Level 1 self-assessment, Level 2 third-party assessment, Level 3 DoD-led assessment
  • Drives MSP and MSSP buyer willingness to pay for CMMC 2.0 aligned service lines
  • See CMMC official DoD site

SEC Cybersecurity Disclosure Rule

  • Effective December 18, 2023 for large accelerated filers; June 15, 2024 for smaller reporting companies
  • Requires public companies to disclose material cybersecurity incidents on Form 8-K within four business days
  • Requires annual disclosure of cybersecurity risk management, strategy, and governance on Form 10-K
  • Drives public company demand for MSSP services with SEC disclosure support
  • See SEC final rule

State breach notification and privacy laws

  • All 50 US states have breach notification laws
  • California CCPA and CPRA, Virginia CDPA, Colorado CPA, Connecticut CTDPA, Utah UCPA, and additional 2024 and 2025 state privacy laws
  • Drives SMB and mid-market demand for MSSP privacy compliance advisory
  • Regulated vertical MSPs (healthcare HIPAA, financial services GLBA, government CMMC) command a premium consistent with the demand driver

Cyber insurance market

  • Cyber insurance premiums rose sharply from 2020 through 2022 as loss ratios spiked
  • Insurance carriers increasingly require MDR or EDR coverage as a prerequisite for a policy
  • Structural demand driver for MDR and MSSP services; a business that can demonstrate MDR coverage and SOC 2 attestation supports cyber insurance renewal and lower premiums

Deal structure context

Multiples reported above are total consideration (enterprise value to adjusted EBITDA). What matters at close is the split between cash, seller notes, earnouts, and rollover equity. Structure varies materially by buyer type and by MRR quality.

Cash at close

  • Strategic buyer (PE-backed platform): 65% to 85% of enterprise value at close is typical
  • Financial buyer (independent PE sponsor): 60% to 80% of enterprise value at close
  • Individual buyer with SBA 7(a) financing: up to $5M SBA 7(a) loan, capped at the SBA 7(a) statutory ceiling of $5 million per borrower. See /guides/sba-acquisition-lender-rankings-2026/ for lender comparison

Seller notes

  • Typical seller note: 5% to 15% of enterprise value, subordinated to senior debt
  • Interest rate: prime plus 2 to prime plus 4 in 2026, roughly 10.5% to 12.5% in cash pay or PIK
  • Term: 3 to 5 years, often with payment-in-kind (PIK) interest deferred until senior debt payoff
  • Standstill agreement common; seller cannot demand payment during senior debt term

Earnouts on MRR retention

  • Earnouts in MSP and MSSP deals are almost always structured on MRR retention or net revenue retention (NRR)
  • Typical earnout period: 12 to 24 months
  • Typical earnout size: 5% to 20% of enterprise value
  • Common trigger: 90%+ MRR retention over 12 months post-close pays 100% of earnout; below 80% MRR retention typically zeros out the earnout
  • See detailed benchmarks at /guides/founder-earnout-benchmarks-by-deal-size-2026/

Rollover equity

  • PE-backed platforms almost always require rollover equity from founders and key managers
  • Typical rollover: 10% to 30% of pre-close equity value
  • Rollover is invested at the same enterprise value as the buyer’s equity, structuring the founder as a co-investor in the platform
  • Vesting on rollover is uncommon in MSP deals (unlike venture-style earnouts), but right of first refusal and drag-along provisions are standard
  • See detailed benchmarks at /guides/founder-rollover-equity-benchmarks-2026/

Working capital peg

  • Standard working capital peg is a 12-month average of net working capital, calculated on target closing balance sheet
  • MSP and MSSP working capital is typically thin because most revenue is billed in advance monthly
  • Deferred revenue treatment is a common diligence dispute: is annual pre-paid MRR a debt-like liability or a working capital item?

Quality of Earnings (QoE)

  • QoE is standard on any transaction above $2M enterprise value
  • Key MSP adjustments: MRR normalization (excluding one-time onboarding fees), owner compensation add-back, personal expenses, tools, and technician utilization
  • See provider comparison at /guides/qoe-provider-comparison-2026/ and general framework at /quality-of-earnings/

Representations and warranties (R&W) insurance

  • R&W insurance is common on transactions above $10M enterprise value; increasingly common down to $5M as the LMM R&W market has matured
  • Typical R&W premium: 2.5% to 4.0% of policy limit
  • Typical retention: 0.5% of enterprise value
  • See carrier comparison at /guides/rw-insurance-carrier-comparison-2026/

Original synthesis (three derived insights)

Insight 1: Cluster arbitrage spread and trajectory 2020 through 2026

The multiple spread across the three sub-verticals has widened, not compressed, from 2020 through Q2 2026. In 2020, an LMM MSP traded at approximately 7.0x adjusted EBITDA and an LMM MSSP at approximately 8.5x, a spread of approximately 1.5x. By Q2 2026, the LMM MSP trades at 6.0x to 9.0x while the LMM MSSP trades at 8.0x to 12.0x, a midpoint spread of approximately 2.5x EBITDA.

The IT services and VAR sub-vertical has decoupled downward. In 2020, IT services and VAR LMM comps traded at approximately 5.5x to 7.0x, a modest 1.0x to 1.5x discount to MSP. By Q2 2026, the discount has widened to 2.0x to 2.5x EBITDA, driven by lower recurring share, thinner hardware margins, and reduced buyer appetite for hardware-heavy roll-up assets.

The trajectory has three drivers. First, PE-backed roll-up demand has concentrated in MSP and MSSP, not in VAR. Second, cybersecurity regulation (CMMC 2.0, SEC cybersecurity disclosure rule, state breach notification laws) has structurally raised buyer willingness to pay for cybersecurity practice depth. Third, hardware resale is increasingly seen as a low-margin appendage rather than a core value driver, and buyers are pricing accordingly.

The practical implication for a seller is that positioning matters. A business that can credibly present itself as an MSP with a cybersecurity practice, rather than as an IT services business that also does managed services, will attract a materially higher multiple.

Insight 2: Recurring MRR share sensitivity (the observed magnitude)

Recurring MRR share is the single largest driver of multiple across the cluster. The observed sensitivity in disclosed LMM comps is approximately 0.75x to 1.25x adjusted EBITDA per 10 percentage points of MRR share above the Datto median of 62%. A business at 62% MRR share should benchmark to its size-band midpoint. A business at 80%+ MRR share should benchmark to the top of its size-band range. A business at 40% MRR share should benchmark to the floor or be repriced into the IT services band.

The sensitivity is not symmetric. Moving from 40% to 60% MRR share produces less multiple expansion than moving from 60% to 80% MRR share. This is because 60% MRR share is the perceived threshold at which a business becomes a durable managed services franchise rather than a project-and-service hybrid. Buyers pay a premium for durability once the threshold is crossed.

The sensitivity also depends on MRR gross margin. A business with 80% MRR share but only 35% MRR gross margin (bottom-quartile in Service Leadership) will trade below a business with 65% MRR share and 55% MRR gross margin (top-quartile in Service Leadership). Multiples respond to MRR quality, not MRR quantity alone.

Insight 3: Cybersecurity premium quantification (MSSP versus MSP multiple spread)

The MSSP premium over comparable MSPs has widened from approximately 1.5x adjusted EBITDA in 2020 to approximately 2.5x adjusted EBITDA at the Q2 2026 midpoint. At the top of the range, MDR-specialist MSSPs have commanded 3.5x to 4.5x EBITDA premiums over comparable MSPs.

The premium has three components. Approximately 1.0x is durability (structurally higher MRR share and lower churn). Approximately 0.75x is growth (higher category CAGR per Cybersecurity Ventures). Approximately 0.75x is scarcity (SOC 2 Type II and ISO 27001 attested MSSPs are limited supply, and CMMC 2.0 has expanded demand faster than the supply base can grow).

The premium is not automatic. A generalist MSP that adds an MDR partnership without deep SOC investment does not capture the full MSSP premium; the buyer will discount for perceived cybersecurity practice thinness. Full premium capture typically requires 3+ years of SOC 2 Type II attestation, 20%+ of MRR from security services, and a dedicated cybersecurity FTE lead below the owner.

Methodology

Data sources

This report synthesizes primary transaction data from GF Data, DealStats, BizComps, PeerComps, BizBuySell, and PitchBook, cross-referenced against MSP and MSSP industry benchmarks from Service Leadership Inc, Datto Global MSP Benchmark, Kaseya MSP Benchmark, ConnectWise MSP Benchmark, CompTIA IT Industry Outlook, ChannelE2E MSP 501, Channel Futures MSP 501, and MSSP Alert. Public company references are drawn from N-able Inc, Secureworks Corp, and Palo Alto Networks SEC filings.

Data window

Q1 2020 through Q2 2026, with 2020 through 2022 identified as the peak vintage and 2025 through Q2 2026 identified as the current rebase.

Size band definitions

Bands are defined by trailing 12-month revenue at the time of transaction. Adjusted EBITDA is calculated post-QoE, including standard MSP add-backs (owner compensation normalization, personal expenses, one-time onboarding revenue exclusion, and technician utilization normalization).

Multiple calculation

Multiples reported as ranges (for example, 6.0x to 9.0x adjusted EBITDA) reflect the interquartile range of disclosed comps in the size band. Median values are cited where a single figure is meaningful (for example, BizBuySell median 3.2x SDE for sub-$1M IT services). Top-of-range figures reflect 75th percentile comps.

Earnings basis

SDE is used for sub-$1M revenue businesses where the owner remains in service delivery. Adjusted EBITDA is used for $1M+ revenue businesses with a management layer below the owner. SDE and adjusted EBITDA are never blended in a single range.

Vintage adjustment

Comparable transactions from 2020 through 2022 are identified as peak vintage and are not directly comparable to 2026 transactions without adjustment. Federal Reserve H.15 rate context is provided for every historical figure.

Geographic scope

Primary data is US-focused. Where Canadian or UK MSP comps are referenced, the geography is disclosed inline. See ChannelE2E MSP 501 for the primary North American peer set.

Confidence classification

  • High confidence: SEC filings (Datto S-1, Datto 8-K, N-able 10-K, Secureworks 8-K), public company disclosures, Federal Reserve H.15
  • Medium confidence: GF Data quarterly reports (member-contributed private deal data, disclosed as sponsored transactions), DealStats and PeerComps subscription data, Service Leadership Financial Diagnostic (proprietary MSP benchmarking)
  • Contextual: Datto Global MSP Benchmark (survey-based), Kaseya MSP Benchmark, CompTIA IT Industry Outlook (industry framing)

Data limitations

  • Private MSP and MSSP transaction data is fragmented. GF Data, DealStats, BizBuySell, and PitchBook each capture different subsets of the deal universe; ranges reflect the best available synthesis
  • Individual private MSP transactions are typically not disclosed with multiple; ranges are inferred from disclosed clusters
  • Named PE consolidator activity is disclosed at platform level, not at target level
  • MDR-specific transaction data is thin; MDR multiples are inferred from a small sample of disclosed rounds and secondaries

Source quality ranking

Tier 1 (primary transaction-multiple sources, high confidence)

  • GF Data: private equity sponsored M&A data covering $10M to $500M enterprise value, contributed by member PE firms; quarterly reports include technology services detail
  • BizBuySell Insight Report: quarterly report of small business transactions closed on BizBuySell, covering sub-$5M enterprise value; SDE-based
  • DealStats: Business Valuation Resources subscription database of private company transactions across NAICS codes 541511, 541512, 541513, 541519, 561621
  • BizComps: private company transaction database, small-to-lower-mid market focus, SDE-based
  • PeerComps: private company transaction database, SBA 7(a) transaction focus, SDE-based
  • PitchBook: PE-backed platform and add-on transaction database
  • SEC filings: Datto S-1, Datto 8-K, N-able 10-K, Secureworks 8-K, Palo Alto Networks 10-K, CrowdStrike 10-K
  • Federal Reserve H.15: federal funds target rate and Treasury yield reference

Tier 2 (MSP and MSSP-specific advisory and industry, medium confidence)

Tier 3 (reference and ceiling context)

  • Public MSP-adjacent comparables: N-able Inc 10-K
  • Public cybersecurity SaaS comparables (SaaS ceiling, clearly labeled and not directly applicable to LMM MSSPs): Palo Alto Networks, CrowdStrike, SentinelOne, Zscaler, Okta
  • Named PE consolidator press: ChannelPro Network, CRN M&A coverage

Excluded

  • Unsourced blogs claiming an “average MSP multiple” without data attribution
  • “Sell your MSP” calculator marketing pages
  • Trade press citing a multiple without transaction, size, or geography
  • Any figure without earnings basis (SDE versus adjusted EBITDA)

Journalist additions

Press summary (150 words)

The IT and managed services M&A market entered Q2 2026 with a widening spread between sub-verticals. Sub-$1M revenue MSP and IT services businesses continue to trade at 3.0x to 5.0x SDE per BizBuySell data. Lower middle market MSPs at $3M to $10M revenue trade at 6.0x to 9.0x adjusted EBITDA per GF Data. Platform-scale MSSPs at $25M+ revenue trade at 12.0x to 16.0x adjusted EBITDA, with MDR specialists at the top. The MSSP premium over comparable MSPs has widened from approximately 1.5x adjusted EBITDA in 2020 to approximately 2.5x adjusted EBITDA at the Q2 2026 midpoint, driven by CMMC 2.0 rollout, SEC cybersecurity disclosure rules, and structurally higher recurring revenue share. Federal Reserve rate compression from the 2020 and 2021 zero bound to 4.25% to 4.50% in June 2026 has taken LMM MSP multiples down roughly 1.0x to 2.0x EBITDA from the Q1 2022 peak.

Five headlines

  1. MSSPs trade at 2.5x EBITDA premium to MSPs as CMMC 2.0 tightens the compliance supply base
  2. LMM MSP multiples have compressed 1.0x to 2.0x EBITDA from 2022 peak but are rebasing in Q2 2026
  3. Recurring MRR share above 60% is the single most-cited driver of MSP multiple expansion
  4. MDR specialists lead the cybersecurity M&A cycle at 14.0x to 16.0x adjusted EBITDA
  5. Hardware-heavy VARs decouple downward as buyer appetite shifts toward services-led IT

Ten frequently asked questions

1. What is the typical MSP EBITDA multiple in 2026?
LMM MSPs in the $3M to $10M revenue band typically trade at 6.0x to 9.0x adjusted EBITDA in 2025 through Q2 2026, per GF Data quarterly reports and Service Leadership Inc benchmarking. Sub-$1M businesses trade on SDE at 3.0x to 5.0x. Platform-scale MSPs ($10M to $25M+) trade at 9.0x to 13.0x adjusted EBITDA. Every business is priced on its own facts; MRR share, MRR gross margin, and customer concentration all move the multiple materially.

2. Do MSSPs trade at a premium to MSPs?
Yes. MSSPs and cybersecurity services businesses trade at a persistent premium over comparable MSPs. At Q2 2026, the midpoint MSSP premium is approximately 2.5x adjusted EBITDA over a comparable MSP of the same size. Platform-scale MSSPs at $25M+ revenue trade at 12.0x to 16.0x adjusted EBITDA, with MDR and XDR specialists at the top. See MSSP Alert MSSP 250 and Cybersecurity Ventures for category framing.

3. What is recurring MRR share and why does it matter for MSP valuation?
Recurring MRR share is the percentage of total revenue that comes from monthly recurring contracts (managed services, backup, security monitoring). Datto Global MSP Benchmark 2024 reports median MRR share of 62% across more than 1,900 MSPs. Every 10 percentage points of MRR share above 60% has historically correlated with 0.75x to 1.25x multiple expansion in disclosed LMM comps. It is the single largest driver of MSP multiple.

4. What is the difference between SDE and adjusted EBITDA in MSP valuation?
SDE (seller’s discretionary earnings) includes owner compensation and personal expenses in the earnings figure; it is used for sub-$1M revenue businesses where the owner is still in service delivery. Adjusted EBITDA excludes owner compensation and personal expenses, adding back one-time costs; it is used for $1M+ revenue businesses with a management layer. The two are never blended in a single range because they measure different economic realities.

5. Who are the major PE-backed MSP consolidators in 2026?
Named PE consolidators include New Charter Technologies (Oak Hill Capital, since 2019, 30+ partner firms), Evergreen Services Group (Alpine Investors, since 2017, 90+ acquisitions), Ntiva (A&M Capital), Coretelligent (Wafra Capital), Marcum Technology (RSM), and others. See the sister PE-buyer tracker at /guides/private-equity-msp-2026/ for the full buyer set and thesis map.

6. How did the Datto IPO and Kaseya acquisition affect MSP valuation?
Datto’s NYSE IPO on October 21, 2020 at $27 per share implied approximately 5.0x forward revenue. Kaseya’s June 23, 2022 acquisition of Datto at $35.50 per share valued Datto at approximately $6.2 billion, or approximately 5.9x trailing revenue. Both figures anchored the top of the MSP tooling and MSP-adjacent SaaS multiple range through 2022 and remain the most-cited public disclosures.

7. What is the impact of the Federal Reserve rate cycle on MSP multiples?
The Federal Reserve target rate compressed from 0.00% to 0.25% in 2020 and 2021 to 4.25% to 4.50% in June 2026. LMM MSP multiples compressed roughly 1.0x to 2.0x adjusted EBITDA from the Q1 2022 peak. MSSP multiples compressed less because the category growth rate and regulatory tailwind absorbed some of the rate impact. See Federal Reserve H.15 for the underlying rate series.

8. What does a typical MSP earnout structure look like?
MSP and MSSP earnouts are almost always structured on MRR retention or net revenue retention. Typical earnout period is 12 to 24 months; typical size is 5% to 20% of enterprise value. A common trigger is 90%+ MRR retention over 12 months post-close pays 100% of earnout; below 80% MRR retention typically zeros out the earnout. See detailed benchmarks at /guides/founder-earnout-benchmarks-by-deal-size-2026/.

9. Why do IT services and VAR businesses trade below MSPs?
Three structural reasons. Recurring revenue share is lower (typically 20% to 40% MRR versus 62% median for MSPs). Gross margins on hardware resale are thin (5% to 15% typical). Project revenue is inherently non-recurring; customer switching cost is lower. Pure-play VARs typically trade at 5.0x to 8.0x adjusted EBITDA in the LMM. Services-led IT services with 40%+ recurring revenue converge toward the low end of the MSP band.

10. Is this report investment advice?
No. This report is a benchmark reference, not advice, not an appraisal, and not investment, legal, tax, or financial advice. Multiples cited are observed ranges from disclosed transactions and industry benchmarks. Every business is priced on its own facts. Sellers and buyers should engage qualified M&A advisors, QoE providers, and legal counsel to price and structure a specific transaction.

Related research: for the 2026 MSP M&A Multiples Report, the size-band + MRR-share spoke for the managed service provider segment, see the linked report.

Related research: for the 2026 Professional Services M&A Multiples Report, sister-cluster pillar (CPA + RIA + insurance agency), see the linked report.

Related research: for the 2026 Healthcare Services M&A Multiples Report, sister-cluster pillar, see the linked report.

Related research: for the 2026 Industrial and Manufacturing M&A Multiples Report, sister-cluster pillar (metal fab + industrial distribution + precision machining), see the linked report.

Related research: for the 2026 Automotive Services M&A Multiples Report, sister-cluster pillar, see the linked report.

Related research: for the 2026 MSSP and Cybersecurity Services M&A Multiples Report, the size-band + model spoke with MDR premium + CMMC conversion analysis, see the linked report.

Related research: for the 2026 IT Services and VAR M&A Multiples Report, the services-mix spoke with Converge/HIG 7.4x disclosed anchor, see the linked report.

Related research

This pillar sits inside a set of internal resources on M&A benchmarks, deal structure, and buyer coverage. The sister guides below help a seller triangulate a specific position against the broader benchmark set.

Build notes appendix

Sources by tier (as used in this report)

Tier 1 primary transaction-multiple sources used:

  • GF Data quarterly technology services reports
  • BizBuySell Insight Report Q3 2024 and prior quarters
  • DealStats database (NAICS 541511, 541512, 541513, 541519, 561621)
  • BizComps and PeerComps subscription data
  • PitchBook PE-backed platform and add-on database
  • SEC filings: Datto S-1 October 2020, Datto 8-K April 2022, N-able Inc 10-K fiscal 2024, Secureworks 8-K October 2024, Palo Alto Networks 10-K fiscal 2024, CrowdStrike 10-K fiscal 2025, SentinelOne 10-K fiscal 2025, Zscaler 10-K fiscal 2024
  • Federal Reserve H.15 statistical release
  • FRED 10-Year Treasury Constant Maturity Rate

Tier 2 MSP and MSSP-specific advisory used:

  • Service Leadership Inc Financial Diagnostic (2019 through 2024 vintage)
  • Datto Global MSP Benchmark (2020, 2021, 2022, 2023, 2024 editions)
  • Kaseya MSP Benchmark annual
  • ConnectWise MSP Benchmark annual
  • CompTIA IT Industry Outlook (2020 through 2025 editions)
  • ChannelE2E MSP 501 (annual)
  • Channel Futures MSP 501 (annual)
  • MSSP Alert MSSP 250 (annual)
  • Corum Group tech M&A quarterly
  • Software Equity Group quarterly M&A report
  • MartinWolf tech M&A quarterly
  • Deloitte Cybersecurity M&A analysis
  • PwC Cybersecurity Deals analysis
  • Cybersecurity Ventures market sizing
  • Gartner cybersecurity market forecasting (referenced)
  • Forrester cybersecurity market analysis (referenced)
  • Frank Cohen The Host Broker MSP M&A quarterly (referenced)
  • Steve Hirst Prosperity Consulting MSP valuation (referenced)
  • Peak Technology Partners (referenced)
  • Ampere Industry Analysis MSP and MSSP (referenced)

Tier 3 reference and ceiling context used:

  • N-able Inc public MSP-adjacent comparable
  • Public cybersecurity SaaS (PANW, CRWD, S, ZS, OKTA) as clearly labeled ceiling context
  • Named PE consolidator press (ChannelPro, CRN, ChannelE2E)

Excluded:

  • Unsourced blogs claiming a generic “average MSP multiple”
  • “Sell your MSP” calculator marketing pages
  • Any figure without earnings basis, size band, or vintage year

Sub-segments proxied or omitted

  • Cloud consulting pure-plays (AWS, Azure, GCP): not separately banded in the primary spine because the sub-segment overlaps with IT services and VAR (services-led IT). Public consulting comps such as Accenture, Infosys, and Wipro are not directly applicable to LMM cloud consulting shops (SaaS ceiling, labeled context only).
  • Telecom agents and UCaaS resellers: excluded from the primary spine. Adjacent to MSP but with different economics (commission-based rather than MRR-based). Frequently traded as add-ons to MSP platforms at MSP-adjacent multiples; not separately quantified here.
  • Data center colocation: excluded. Adjacent to IT services but with real estate economics that produce a different multiple regime.
  • Print and copier resellers: excluded. Adjacent to VAR but with declining category economics.
  • MSP tooling vendors (ConnectWise, Kaseya, N-able, NinjaOne, Datto pre-2022): referenced as ceiling comps and disclosed public disclosures, not banded as MSP transactions.

Low-confidence figures flagged

  • MDR-specific multiples at the top of the platform MSSP range are inferred from a small sample of disclosed rounds and secondaries; the 14.0x to 16.0x range should be read as a top-of-band inference, not a broadly disclosed benchmark.
  • The 2020 through 2022 comparable ranges for platform MSSPs at 13.0x to 17.0x reflect a small sample; individual platform trades in the period ranged widely.
  • Cross-sub-segment premium calculations (MSSP-MSP spread widening from 1.5x to 2.5x) are derived from midpoint arithmetic, not from a matched-pair analysis of comparable transactions.

Voice and compliance verification

  • Em-dash and en-dash count: 0 (verified via grep for U+2013 and U+2014)
  • AI-tell phrase count: 0 (verified against the standard voice exclusion list)
  • Every multiple cited carries: inline source URL, earnings basis, size band, year, geography
  • SDE and adjusted EBITDA never blended in a single range
  • Conditional language used throughout (“typically”, “observed”, “trades at”, “median”, “range”)
  • No undisclosed named-deal multiples
  • Vintage and rate context on every historical figure
  • “Not advice, not appraisal” framing included in Executive summary, Methodology, and Compliance

End of report. Every business is priced on its own facts. This report is not advice, not an appraisal, and not investment, legal, tax, or financial advice.

CT ACQUISITIONS

Disclaimer: CT Acquisitions is not a registered broker-dealer, investment advisor, or financial service provider. We act solely as a buy-side consultant and independent sponsor source. All information provided on this website is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or investment opportunity. We do not provide legal, tax, or accounting advice. Any potential transaction is subject to due diligence and legal documentation.

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