IT Services and VAR M&A Multiples Report 2026: Valuation Benchmarks by Size and Services Mix

This IT services and VAR M&A multiples report for 2026 benchmarks what value-added resellers, solutions providers, systems integrators, and cloud consultancies appear to sell for in the United States and Canada, organized by size band and by services mix. The single most important finding is structural rather than numerical: services share of gross profit, not revenue size, is the dominant valuation axis in this vertical. A resale-heavy VAR and a cloud consultancy with identical earnings can price an estimated five or more turns of adjusted EBITDA apart. Everything else in this report, from the size-band spine to the fourteen drivers to the deal structure conventions, is downstream of that one axis. The report sits inside our IT and managed services M&A multiples cluster, and it reads best alongside the sibling MSP multiples benchmark, which supplies the recurring-revenue comparison used throughout.

Data vintage: deal evidence and survey data through Q2 2026, compiled July 2026. Coverage: project-based IT services, hardware and software resale, systems integration, cloud consulting, and channel partner specialists. Geography: United States and Canada primary, with UK context where noted. This report is market research and editorial benchmarking. It is not a business appraisal, not a fairness opinion, and not investment, legal, or tax advice.

Every range below is an estimate, stated conditionally, with its earnings basis, size band, vintage, geography, and source named. Private-market transaction data carries survivorship and selection bias, so the honest reading of any band in this report is that well-run companies which transacted appear to have cleared there, not that any specific company is worth that figure. Owners weighing a sale should treat this as orientation, then commission transaction-specific work.

Executive Summary

• Services mix is the dominant axis, more powerful than size. A $40M revenue pure VAR frequently appears to price below a $12M revenue cloud consultancy on absolute enterprise value, because buyers price gross profit quality rather than top-line volume. The full journey from a resale-heavy book to a cloud-consulting mix spans an estimated five to seven turns of adjusted EBITDA in the US lower middle market for 2025 through Q2 2026.
• Pure VARs price at an estimated 3x to 5x adjusted EBITDA. Resale-dominant VARs with under 20 percent of gross profit from services are estimated at 3x to 5x adjusted EBITDA in the US lower middle market, 2025 through Q2 2026, based on triangulation of GF Data middle-market averages, DealStats records under NAICS 423430, and martinwolf IT supply chain commentary. Where the separate gross profit convention applies, the equivalent estimated range is 0.3x to 0.6x trailing gross profit, and the two conventions are never blended in this report.
• Solutions providers command an estimated 6x to 8x. Companies that have moved 40 percent or more of gross profit into services appear to transact at an estimated 6x to 8x adjusted EBITDA at $5M to $50M revenue in the US, a spread of roughly two to three turns over resale-heavy peers of identical revenue size.
• Cloud consulting is the premium case at an estimated 8x to 11x. Cloud migration and consulting specialists, particularly Microsoft and AWS partners with delivery accreditations, appear to price at an estimated 8x to 11x adjusted EBITDA in the US lower middle market, closer to software services territory than to hardware channel territory.
• The VAR discount against recurring-revenue MSPs is structural. Our sibling MSP benchmark places lower-middle-market MSPs at 6x to 9x adjusted EBITDA, which suggests a comparable-size pure VAR gives up roughly two to four turns for lacking contracted monthly recurring revenue.
• The Converge take-private is the vertical’s disclosed anchor. The H.I.G. Capital take-private of Converge Technology Solutions, announced February 7, 2025 at C$5.50 per share and closed April 22, 2025, carried an enterprise value of approximately C$1.3 billion and a disclosed multiple of approximately 7.4x trailing-twelve-month adjusted EBITDA to September 30, 2024. That print anchors the platform-scale solutions provider band at roughly 7x to 8x, and it converts to approximately US$910 million at prevailing exchange rates.
• AI-infrastructure demand is real, but multiple credit is cautious. Canalys forecast global IT spending of $5.44 trillion for 2025 with partner-delivered IT at 70 percent of the total. Buyers appear to credit documented AI-infrastructure gross profit with an estimated half turn to one turn at most, and they normalize one-time hardware surges out of adjusted EBITDA in diligence.
• Rate context has modestly widened buyer capacity. The Federal Reserve held the federal funds target at 3.50 to 3.75 percent at the June 17, 2026 FOMC meeting per the Federal Reserve H.15 release and FRED series DFEDTARU. That is 175 basis points below the 2023 to 2024 peak, and cheaper senior debt supports the modest multiple firming GF Data recorded through 2025.

Key Findings

Each finding carries its earnings basis, size band, year, geography, and source. Conditional language is used throughout because private-market transaction data is reported with survivorship and selection bias, and because no published range substitutes for a transaction-specific valuation.

1. Pure VAR, lower middle market, US, 2025 through Q2 2026. Resale-dominant VARs at $5M to $50M revenue with under 20 percent services share of gross profit are estimated to transact at 3x to 5x adjusted EBITDA. The estimate triangulates DealStats records under NAICS 423430 (computer and computer peripheral equipment wholesalers) and NAICS 541512 (computer systems design services), IBBA Market Pulse survey conventions for Main Street and lower-middle-market deals, and martinwolf IT supply chain deal commentary.
2. Gross profit convention, pure VAR, US, 2025 through Q2 2026. Where buyers quote VAR deals on gross profit rather than EBITDA, the estimated range is 0.3x to 0.6x trailing gross profit for resale-heavy books. The convention is documented in channel M&A practice by ChannelE2E deal coverage and martinwolf transaction commentary, and it exists because pass-through hardware revenue makes revenue multiples meaningless for VARs. This is a separate convention from EBITDA pricing and is never blended with it in this report.
3. Disclosed platform print, North America, 2025. Converge Technology Solutions was taken private by H.I.G. Capital at approximately 7.4x trailing-twelve-month adjusted EBITDA (TTM to September 30, 2024), at C$5.50 per share and an enterprise value of approximately C$1.3 billion, announced February 7, 2025 and closed April 22, 2025. Houlihan Lokey advised on the transaction. H.I.G. subsequently merged Converge with Mainline Information Systems to form Pellera Technologies. This is the only named-deal multiple stated anywhere in this report, because it is the only one its principals disclosed.
4. Strategic acquirer print, US, 2024. Xerox acquired ITsavvy for $400 million, structured as $180 million in cash plus $220 million in secured promissory notes, announced October 2024 and closed November 2024 per GenNx360’s closing announcement. No EBITDA multiple was disclosed, so the deal is cited as a structure and appetite marker only, never as multiple evidence.
5. Sponsor-to-sponsor platform markers, US, 2024 to 2025. CD&R agreed to acquire a majority stake in Presidio from BC Partners on April 2, 2024 with terms undisclosed. Apollo funds agreed to acquire Trace3 from American Securities in August 2025, and the deal closed in November 2025; American Securities had entered Trace3 in 2021. Both trades are cited as structural evidence of sustained sponsor appetite for scaled solutions providers, not as multiple evidence.
6. Public ceiling, US, FY2025. CDW reported net sales of $22.4 billion for fiscal 2025, up 6.8 percent year over year. CDW’s gross margin was 21.7 percent. Hardware ran at 71.6 percent of net sales, and services contributed $2.0 billion. CDW defines the economics every VAR buyer benchmarks against: scale purchasing, vendor program depth, and services attach.
7. Public comparable set, US, FY2025. Insight Enterprises reported net sales of $8.2 billion, down 5 percent, with gross margin expanding 110 basis points to 21.4 percent as the mix shifted toward services and cloud. Connection reported net sales of $2.9 billion on gross billings of $4.1 billion for 2025. ePlus reported fiscal 2025 net sales of $2.07 billion with gross margin of 27.5 percent, up from 24.8 percent a year earlier, which stands as the clearest public illustration of a resale-to-services mix shift lifting margin.
8. Private mega-VAR context, US, 2025. SHI International surpassed $16 billion in rolling twelve-month gross sales as announced in October 2025. World Wide Technology reports revenue near $20 billion per PitchBook profile data. Both remain private and neither discloses earnings, so they inform scale context only, not pricing.

9. UK context, FY2025. Softcat reported gross invoiced income of £3.6 billion, up 26.8 percent, and gross profit of £494.3 million, up 18.3 percent for the year ended July 2025, marking twenty consecutive years of double-digit gross profit growth. UK listed VARs report gross invoiced income separately from net revenue precisely because agency accounting deflates reported revenue on software and cloud resale, the same distortion that drives the US gross profit convention.
10. Middle-market backdrop, US, 2025. GF Data reported average buyout pricing of 7.5x trailing adjusted EBITDA in Q3 2025, up from 6.9x in Q2, across PE-sponsored deals of $10 million to $500 million enterprise value. Business services deals in the GF Data set averaged 7.4x in 2025, tying the highest level in the database’s history per Middle Market Growth’s GF Data coverage.
11. Channel demand backdrop, global, 2025. Canalys forecast global IT spending of $5.44 trillion in 2025, up 7.7 percent, with partner-delivered IT accounting for 70 percent of the total. The partner share was 73 percent in 2023 and 71 percent in 2024, a slow drift that reflects direct cloud consumption growing faster than channel resale.
12. Deal flow rhythm, North America, 2025 to 2026. martinwolf’s 2026 IT M&A outlook described a real pause in the first half of 2025 followed by a significant pickup toward year end, with elevated activity expected to continue through 2026 across the IT supply chain and tech-enabled services.
13. Rate vintage, US, mid-2026. The federal funds target range stood at 3.50 to 3.75 percent after the June 17, 2026 FOMC hold per FRED series DFEDTARU. The 10-year Treasury yielded approximately 4.4 percent at the end of June 2026 per FRED series DGS10. Cheaper senior debt than the 2023 to 2024 window supports the modest multiple firming GF Data observed through 2025, and it matters for vintage comparison: a 2023 print and a 2026 print were financed in different worlds.
14. Cross-vertical comparison, US, 2025 through Q2 2026. Our MSP multiples benchmark places lower-middle-market MSPs at 6x to 9x adjusted EBITDA and PE platform MSP trades at 10x to 13x, which implies the recurring-revenue premium over a comparable pure VAR is roughly two to four turns at equivalent EBITDA.
15. Consolidation infrastructure, US, ongoing. Named PE-backed consolidators active across IT services and the channel include Evergreen Services Group, New Charter Technologies, Ntiva, Trace3 under Apollo, and Pellera under H.I.G., alongside strategics such as Xerox (ITsavvy) and Ricoh, which acquired AV and IT integrator Cenero in September 2022 on undisclosed terms. Buyer depth at every size band is a structural support under lower-middle-market pricing.

Multiples by Size Band

The table below is the spine of this report. Three conventions appear and are never mixed within a row: SDE (seller’s discretionary earnings) for owner-operated books, adjusted EBITDA for professionally managed companies, and gross profit multiples where the channel convention applies. VAR revenue is inflated by pass-through hardware, so gross profit is the honest size metric. Each band therefore states both revenue and the typical gross profit that revenue implies at channel-normal blended margins of roughly 15 to 25 percent.

All ranges are estimates for US transactions, 2025 through Q2 2026 vintage, triangulated from GF Data, DealStats (NAICS 541512 and 423430), BizBuySell Insight reports, IBBA Market Pulse, PitchBook, and martinwolf deal commentary, anchored where possible to disclosed prints. Actual outcomes vary widely with services mix, which is treated in the next section.

Size band (revenue)	Implied gross profit band	Earnings basis	Estimated multiple range (US, 2025 to Q2 2026)	Gross profit convention (stated separately)	Typical buyer
Under $5M	Roughly $0.75M to $1.25M GP	SDE (owner-operated)	2.0x to 3.5x SDE	0.25x to 0.45x trailing GP	Individual buyers, SBA-financed searchers, local competitors
$5M to $20M	Roughly $1M to $4.5M GP	Adjusted EBITDA	3.5x to 5.5x (resale-heavy); 5x to 7x (services-led)	0.3x to 0.6x trailing GP	Regional strategics, first-time platform sponsors, MSP consolidators buying the customer list
$20M to $50M	Roughly $3.5M to $11M GP	Adjusted EBITDA	4.5x to 7x (resale-heavy); 6x to 8x (solutions provider)	0.4x to 0.7x trailing GP	PE add-on programs, national solutions providers, strategics filling geographic or vendor-line gaps
$50M to $250M	Roughly $9M to $55M GP	Adjusted EBITDA	6x to 8x, quality-dependent	0.6x to 0.9x trailing GP	PE platforms, sponsor-backed consolidators, large strategics (Xerox/ITsavvy at $400M total consideration sits here)
$250M+ (platform)	Roughly $45M+ GP	Adjusted EBITDA	7x to 9x, with premium mixes above	0.8x to 1.2x trailing GP	Large-cap sponsors and take-privates (Converge/H.I.G. at ~7.4x TTM adjusted EBITDA is the disclosed anchor)

Reading the spine correctly

Sub-$5M revenue. These are owner-operated books valued on SDE, and no serious buyer at this size prices on EBITDA, because the owner is simultaneously the sales force, the top engineer, and the vendor relationship. The estimated 2.0x to 3.5x SDE range is consistent with BizBuySell Insight small-business technology transaction conventions and IBBA Market Pulse Main Street survey bands for 2024 to 2025. Revenue is a nearly useless size signal here. A $4M revenue shop pushing Dell boxes at 8 percent product margin and a $4M revenue shop billing $2.4M of engineering services are businesses of wildly different value, which is why the gross profit column matters more than the revenue column. Buyers at this size lean on SBA 7(a) financing, and SBA lender credit committees have grown cautious on resale-heavy books because hardware gross profit is not contractual. A seller at this size who can show even a modest managed or support contract base tends to clear the top of the band, while a pure fulfillment book may struggle to find any buyer beyond a local competitor absorbing the customer list.

$5M to $20M revenue. This is the widest-variance band in the vertical. A resale-heavy book at this size is estimated at 3.5x to 5.5x adjusted EBITDA, while a services-led book with the same revenue is estimated at 5x to 7x, per triangulation of DealStats NAICS 541512 records with GF Data’s sub-$25M enterprise value cohort. The divergence within a single size band is the clearest evidence that services mix, not size, is the dominant axis. Owner dependency is the second large discount driver at this size, and the mechanics are covered in our companion piece on how owner dependency affects valuation. Buyers in this band also begin to differentiate on financial hygiene: a company with reviewed statements, a functioning CRM, and clean deferred revenue schedules appears to clear meaningfully better than a peer whose books require reconstruction in diligence.

$20M to $50M revenue. Companies here are large enough for a professionalized management layer and a real engineering bench, which pulls the resale-heavy floor up to an estimated 4.5x and lets genuine solutions providers reach an estimated 8x. GF Data’s broader middle-market average of 7.5x in Q3 2025 is a useful ceiling reference for this band: most VAR-classified deals appear to price below the all-industry average, while services-led deals converge toward it. Competitive tension is the swing factor. A process at this size that attracts two or more sponsor-backed consolidators alongside a strategic tends to clear near the top of the applicable range, while a single-buyer negotiated deal tends to settle near the bottom.

$50M to $250M revenue. The Xerox/ITsavvy transaction at $400 million total consideration, closed November 2024, is the reference strategic print for the upper half of this band, though its multiple was undisclosed. Sponsor add-on programs are the marginal buyer through most of this range, and they price against their own platform multiple, which is why estimated pricing firms to 6x to 8x when two or more sponsor-backed consolidators compete for the same asset. Sellers here should expect institutional process mechanics: quality of earnings on both sides, representations and warranties insurance, and a fought-over working capital peg, each of which is treated later in this report.

$250M+ platform. The Converge/H.I.G. print at approximately 7.4x TTM adjusted EBITDA on a C$1.3 billion enterprise value is the single most load-bearing disclosed number in this vertical for 2025. It suggests that even at platform scale, a solutions provider with meaningful resale gravity prices at a discount to pure services peers: GF Data’s all-industry Q3 2025 average of 7.5x sat essentially on top of the Converge print despite Converge’s far greater scale. Presidio (CD&R, agreed April 2024) and Trace3 (Apollo, closed November 2025) confirm buyer depth at this scale without disclosing price, so they widen confidence in the band without moving its edges.

Why gross profit is the real size metric

A VAR reporting $30M of revenue may recognize hardware on a gross basis and software or cloud on a net (agency) basis, so two identical businesses can report revenue figures that differ by a factor of two or more depending on product mix and revenue recognition policy. Softcat’s dual disclosure illustrates the problem at public scale: £3.6 billion of gross invoiced income collapsed to a much smaller statutory revenue figure under agency accounting, while gross profit of £494.3 million remained the stable economic measure per its FY2025 preliminary results. Sophisticated buyers therefore size VAR targets on trailing gross profit and price on either adjusted EBITDA or a separately stated gross profit multiple, never on revenue. Any broker teaser quoting a revenue multiple for a VAR should be treated as a red flag for the quality of the entire process.

Multiples by Sub-Segment: The Services-Mix Axis

Services share of gross profit is the dominant pricing axis in this vertical, and this section quantifies it segment by segment. The bands below are estimates for US lower-middle-market and middle-market transactions, 2025 through Q2 2026, on an adjusted EBITDA basis unless stated otherwise, triangulated from the same source set as the spine and anchored to the disclosed prints named in each row. Gross profit multiples, where quoted, are labeled as such and kept separate.

Sub-segment	Services share of gross profit	Estimated adjusted EBITDA multiple (US, 2025 to Q2 2026, LMM unless noted)	Anchor evidence
Pure VAR (resale-heavy)	Under 20%	3x to 5x (or 0.3x to 0.6x trailing GP under the separate channel convention)	DealStats NAICS 423430 cohort; IBBA Main Street conventions; martinwolf IT supply chain commentary
Solutions provider (resale plus services)	20% to 50%	6x to 8x	Converge/H.I.G. ~7.4x TTM adjusted EBITDA disclosed (platform scale); GF Data business services 7.4x 2025 average
Systems integrator	50%+	7x to 9x	GF Data $10M to $500M EV average 7.5x Q3 2025; sponsor add-on competition
Cloud consulting / migration	70%+ (minimal resale)	8x to 11x	Software Equity Group and Corum Group tech services commentary; scarcity of accredited delivery benches
Microsoft CSP / AWS / Cisco partner specialists	Varies; program economics dominate	7x to 10x with top-tier status; material discount without	Partner-tier gating of rebates and deal registration; CRN Solution Provider 500 program reporting
Staffing-adjacent IT services	High services share but low stickiness	4x to 6x	Bill-rate spread economics; contractor churn; staffing-industry convention
PE-backed platform (scaled)	Mixed, typically 30%+	7x to 9x entry; disclosed anchor 7.4x	Converge/H.I.G. 2025; Presidio/CD&R 2024 and Trace3/Apollo 2025 (terms undisclosed, appetite markers)

Pure VAR, under 20 percent services

The resale-heavy VAR is the discount case of the whole IT channel. Product gross margins in the hardware categories CDW discloses have compressed, with CDW’s own gross margin declining 20 basis points to 21.7 percent in 2025 partly on hardware rate pressure per its full-year earnings release. A small VAR without CDW’s rebate depth typically runs product margins in the single digits to low teens, and its earnings depend on vendor programs it does not control. Buyers respond with an estimated 3x to 5x adjusted EBITDA for US lower-middle-market books in 2025 through Q2 2026, or, under the separately stated channel convention, an estimated 0.3x to 0.6x trailing gross profit. The bottom of the range applies where a single vendor line exceeds half of gross profit. The top applies where the customer list is diversified, public-sector contract vehicles are present, and there is at least a beachhead of services attach that a buyer can expand.

Solutions provider, 20 to 50 percent services

This is the center of gravity of the vertical and the profile the Converge print benchmarks. A solutions provider selling infrastructure plus implementation, support contracts, and some managed services carries earnings that are partly contractual and partly project-based, and the estimated 6x to 8x adjusted EBITDA band for $5M to $250M revenue US companies reflects that blend. GF Data’s 2025 business services average of 7.4x per Middle Market Growth sits inside this band. The disclosed 7.4x Converge multiple sits at its midpoint despite platform scale, which suggests scale buys process depth and buyer competition rather than automatic multiple expansion when resale gravity persists. For an owner in this segment, the practical implication is that the next turn of value comes from mix progression rather than from top-line growth at constant mix.

Systems integrator, 50 percent or more services

Once services pass half of gross profit, the business is valued primarily as a services firm with a procurement arm rather than as a reseller with engineers. Estimated pricing of 7x to 9x adjusted EBITDA applies for US middle-market integrators in 2025 through Q2 2026, converging on the GF Data all-industry average of 7.5x from Q3 2025. Within the band, integrators with repeatable practice areas (network modernization, data center, collaboration) and multi-year support contracts appear to price at the top. Integrators dependent on a handful of large one-time projects appear to price at the bottom regardless of margin, because a buyer cannot underwrite a backlog that resets to zero each year.

Cloud consulting and migration specialists

Cloud-native consultancies with minimal resale are the premium case, estimated at 8x to 11x adjusted EBITDA for US lower-middle-market firms in 2025 through Q2 2026, consistent with tech services commentary from Software Equity Group and Corum Group. Three things appear to drive the premium. Accredited delivery capacity is scarce while hyperscaler consumption keeps growing. Engagements convert into multi-year managed cloud and FinOps relationships rather than ending at go-live. Gross margins on consulting delivery typically run at 35 to 50 percent rather than hardware’s single digits. The premium is conditional on bench durability: a consultancy that would lose its Azure practice lead in a sale prices like a staffing firm, not like a consultancy, and buyers test for exactly that in management meetings.

Microsoft CSP, AWS, and Cisco channel specialists

Partner-program specialists price on program economics. Top-tier status (Cisco Gold, Microsoft Solutions Partner designations with specializations, AWS Premier) gates rebates, market development funds, and deal registration protection, all of which show up directly in gross margin. Estimated pricing for US specialists in 2025 through Q2 2026 runs 7x to 10x adjusted EBITDA where top-tier status is secure and transferable. A material discount, plausibly two turns or more, appears to apply where status depends on certifications held by departing individuals or where a program reclassification is pending. The CRN Solution Provider 500, the canonical channel ranking, is the standard external validation buyers check for program standing and scale.

Staffing-adjacent IT services

IT staffing and staff-augmentation books carry high services share but low switching costs, and they price accordingly at an estimated 4x to 6x adjusted EBITDA for US lower-middle-market firms in 2025 through Q2 2026, in line with long-standing staffing-industry conventions. The economics are bill-rate spread on contractors who can churn to a competitor, and buyers treat the revenue as re-competed continuously. Sellers sometimes present staff augmentation as consulting. A quality of earnings review separates the two within hours, and the reclassification moves the multiple by two to four turns, which is one reason sell-side QoE preparation pays for itself in this vertical more reliably than in almost any other.

PE-backed platforms

Scaled platforms transact between sponsors at an estimated 7x to 9x adjusted EBITDA in North America for 2024 through Q2 2026, with the Converge/H.I.G. print at approximately 7.4x the only disclosed anchor. Presidio’s move from BC Partners to CD&R in 2024 and Trace3’s move from American Securities to Apollo in 2025 demonstrate that the sponsor-to-sponsor lane remains open at scale even without disclosed pricing. Platform buyers underwrite add-on arbitrage: every dollar of EBITDA acquired at an estimated 4x to 6x in the lower middle market and consolidated into a platform marked at 7x to 9x creates immediate paper spread, which keeps a persistent bid under smaller VARs and solutions providers regardless of where the broader M&A cycle sits.

What Moves the Multiple: Fourteen Drivers

Each driver below moves pricing within, and sometimes across, the bands above. Estimated effects are directional and conditional, and no single driver operates independently of the others. They are ordered roughly by weight, with the services-mix driver standing alone at the top.

1. Services share of gross profit (the dominant driver)

The full journey from under 20 percent services to a 70 percent-plus cloud-consulting mix spans an estimated five to seven turns of adjusted EBITDA in the US lower middle market, from roughly 3x to 5x up to 8x to 11x per the sub-segment table above. No other driver in this list approaches that span. Buyers price the mix as it stands at close, though a credible, contracted transition can be partially priced through an earnout. Sellers who claim a mix shift that has not yet reached the gross profit line should expect buyers to price the current mix and structure the promise.

2. Recurring versus project services split

Within the services line, contracted recurring work (managed services, multi-year support, cloud management) is worth more than time-and-materials project work. Our MSP benchmark at 6x to 9x for recurring-dominant lower-middle-market firms, set against the estimated 4x to 6x for project-heavy staffing-adjacent books, brackets the effect at roughly two to three turns for the same nominal services share. The distinction survives every diligence process, because contracts either exist or they do not.

3. Vendor concentration

A VAR whose gross profit depends more than 50 percent on a single vendor line (Cisco, Dell, HPE, Microsoft) carries repricing risk it cannot control, and buyers discount for it. Channel history supplies the cautionary evidence: vendor program restructurings have repeatedly reset reseller economics without notice, a dynamic ChannelE2E has covered across multiple program cycles. An estimated half-turn to full-turn discount applies at high single-vendor concentration, with deeper discounts where the concentrated vendor is actively shifting to a direct or marketplace motion.

4. Vendor rebate share of profit

Distinct from concentration: some VARs report healthy EBITDA of which a third or more is back-end rebates, MDF, and program incentives rather than front-end margin. Rebate income is discretionary from the vendor’s side and is the first casualty of program changes, so a quality of earnings review that restates EBITDA net of at-risk rebate income routinely moves headline pricing. Where rebates exceed roughly 25 percent of EBITDA, buyers tend to price the rebate stream at a discount to the operating stream or carve it into an earnout.

5. Gross margin on resale

Product margin is the honest signal of whether a VAR adds value or forwards boxes. CDW ran 21.7 percent blended gross margin in 2025 at $22.4 billion scale per its earnings release. A lower-middle-market VAR running product margins under 10 percent without offsetting services is signaling commodity fulfillment. Every point of durable product margin above peer norm supports the top of the band, while margins propped up by one-time OEM promotions do not survive diligence.

6. Cloud-transition progress and resale cannibalization

Cloud consumption replaces hardware refresh cycles over time, and the partner-share drift from 73 percent of IT spending in 2023 to 70 percent in 2025 per Canalys quantifies the slow leak. Buyers ask a simple question: when this VAR’s customers move workloads to Azure or AWS, does the VAR capture the migration and management economics, or does it lose the refresh? ePlus’s gross margin expansion to 27.5 percent in fiscal 2025 per its results release illustrates the reward side of a successful mix shift. A VAR with no cloud practice at all is priced as a declining asset regardless of current earnings.

7. Customer concentration

The standard lower-middle-market rule applies with extra force, because VAR relationships often run through a single procurement contact. Buyers typically flag any customer above 15 percent of gross profit and discount or structure around any above 25 percent, with an estimated half-turn to one-turn effect. Public-sector concentration is treated more gently when it runs through multi-year contract vehicles rather than annual purchase orders, because the vehicle itself is the relationship.

8. Engineer bench and certifications

Certified engineering capacity is the production asset of the services side. Buyers audit certification counts, tenure, and the concentration of accreditations in specific individuals, because partner-tier status (driver 10) often hangs on named certificate holders. A bench with depth beyond the founders supports top-of-band pricing. A services P&L that amounts to two billable principals in a trench coat prices like a job, not like a company, and no amount of margin fixes that.

9. Public-sector contract vehicles

Holding NASA SEWP, a GSA Schedule, state term contracts, or cooperative purchasing positions gives a VAR privileged access to sticky demand, and vehicles transfer with the entity in a properly structured deal. Public-sector strength is a stated pillar of several scaled players; Connection reported $0.5 billion of public-sector net sales in 2025 per its results release. An active SEWP or equivalent vehicle with compliance history intact is a premium feature worth an estimated half turn or more to buyers building federal or SLED practices. A vehicle up for recompete within twelve months is a contingency to structure around, not a premium.

10. Deal registration and partner-tier status

Registration protection is what stops a VAR’s designed deal from being fulfilled by a cheaper competitor, and top-tier program status gates the best registration and rebate economics. Diligence tests whether status survives the transaction: some vendor programs re-evaluate on change of control, and a tier that resets post-close was never really the seller’s asset. Transferable top-tier status supports the estimated 7x to 10x specialist band. Non-transferable status collapses the premium entirely.

11. Working capital intensity and the hardware float

VARs carry inventory and large receivables against distributor payables, and the swing between a hardware-heavy quarter and a services-heavy quarter can move net working capital by millions of dollars. The working capital peg is where VAR deals most often turn contentious, because a peg set on a trailing average that includes a hardware supercycle quarter systematically favors one side. Buyers also examine floor-plan financing and distributor credit lines that may not transfer. The mechanics parallel those covered in our earnout and closing benchmarks companion work, and they matter more in this vertical than in any services-only peer group.

12. Owner and rainmaker dependency

Many VARs are built around a founder who owns the top ten customer relationships and the key vendor relationships simultaneously. The discount mechanics are covered in our piece on owner dependency. In this vertical the effect is amplified because vendor field reps route deal registrations through people, not entities, so the founder’s departure can degrade program economics as well as sales. An estimated one-to-two-turn discount applies where the founder is the de facto sales force, partially recoverable through earnout and employment-term structure.

13. Geographic footprint and field capacity

Integrators with multi-market field presence command a premium from national consolidators who would otherwise build coverage market by market. Sponsor-backed platforms explicitly pay for density: the Converge model itself was assembled through dozens of regional acquisitions before its 2025 take-private per the company’s own transaction history. Single-market VARs are add-ons by definition and appear to price accordingly.

14. M&A integration track record

A target that has itself acquired and cleanly integrated smaller books demonstrates the machinery a platform buyer wants. A sloppy roll-up history (unintegrated ERP instances, orphaned customer bases, earnout disputes) is a diligence tax that shows up directly in price and structure. For sellers who bought their way to scale, the integration evidence, or its absence, gets priced. Buyers verify through system counts, churn cohorts of acquired customers, and litigation history, the same checks a QoE provider runs as standard scope.

Trend and Trajectory: 2019 Through Q2 2026

2019 baseline

Pre-pandemic, the VAR channel was viewed as a slow-melt asset class: solid cash generation, low organic growth, cloud cannibalization risk. Lower-middle-market resale-heavy books were estimated in the 3x to 4.5x adjusted EBITDA range in the US, with solutions providers around 5x to 7x, per retrospective triangulation of DealStats vintages and IBBA survey history. The federal funds target sat at 1.50 to 1.75 percent at year-end 2019 per the Federal Reserve H.15 release, which made debt service cheap and kept marginal buyers in processes they would exit at higher rates.

2020 through 2022: hardware supercycle and cloud boom

Remote-work device demand, infrastructure refresh, and cloud migration all surged at once, and channel revenue inflated across the board. Near-zero rates made debt-financed pricing generous, and the channel consolidation machine accelerated. Ricoh’s September 2022 purchase of Cenero typified strategic appetite for hybrid-work integration capacity, on undisclosed terms. Estimated pricing for services-led solutions providers pushed toward the high end of historical bands, and sellers who timed the 2021 to 2022 window captured supercycle earnings at peak multiples. Buyers underwriting those vintages have since learned to normalize supercycle quarters out of trailing EBITDA, a lesson that now shows up in every VAR quality of earnings scope.

2023 through 2024: normalization and rate compression

The federal funds target reached 5.25 to 5.50 percent by July 2023 and held there for fourteen months per FRED series DFEDTARU. Hardware demand normalized off supercycle comparisons, with Insight’s 2025 report of a 5 percent net sales decline extending a hardware digestion trend visible across the public comps per its results release. Debt-financed buyers pulled pricing in by an estimated half turn to a full turn across the vertical relative to the 2021 to 2022 peak. The period’s defining structural marker was the April 2024 Presidio sale to CD&R, proof that sponsor conviction in scaled solutions providers survived the rate peak. Xerox’s $400 million ITsavvy acquisition followed in November 2024, notable for its heavy seller-note structure in a tight credit market.

2025: the Converge marker and the second-half reopening

The February 2025 Converge/H.I.G. agreement at approximately 7.4x TTM adjusted EBITDA gave the vertical its first large disclosed multiple in years and effectively published the platform clearing price. martinwolf’s 2026 outlook described 2025 as a first-half pause followed by a strong finish. GF Data recorded the broader middle market firming to 7.5x by Q3 2025 per its quarterly report. Apollo’s agreement to buy Trace3 in August 2025, closed that November, confirmed that AI positioning had become a headline acquisition rationale at platform scale.

Late 2025 through Q2 2026: the AI-infrastructure resale tailwind

GPU-dense infrastructure, AI-capable PC refresh, and data-center modernization are now pulling demand through the channel. Canalys attached numbers to the demand side: IT spending growth of 7.7 percent for 2025 with AI-related categories leading per its forecast. The public comps confirm the pull-through. CDW grew net sales 6.8 percent in 2025 and framed 2026 guidance around AI-driven demand per its Q4 earnings coverage. Softcat posted 26.8 percent gross invoiced income growth in FY2025 partly on large infrastructure projects per its preliminary results. With the federal funds target down to 3.50 to 3.75 percent as of the June 2026 FOMC hold and the 10-year Treasury near 4.4 percent per FRED DGS10, debt-financed buyers have modestly more room than in 2023 to 2024. The forward question is whether buyers will treat AI-infrastructure revenue as a durable practice or as supercycle 2.0 to be normalized out. Current diligence behavior suggests the market is pricing it cautiously, as project revenue rather than as a re-rating event, and the synthesis section below quantifies that caution.

Deal Structure: How IT Services and VAR Deals Actually Close

Cash at close

For lower-middle-market VAR and IT services deals in 2025 through Q2 2026, cash at close typically runs an estimated 60 to 80 percent of headline consideration, at the lower end for resale-heavy books where buyers push risk into contingent structure. Platform-scale sponsor deals are predominantly cash, as the all-cash Converge take-private illustrates at the top of the market.

Seller notes

Seller paper is a standard feature at the smaller end and periodically reappears at scale when credit is tight. Xerox funded $220 million of its $400 million ITsavvy purchase with secured promissory notes per its announcement, an unusually public example of the structure. In SBA-financed deals, partial standby seller notes remain a common bridge between lender appetite and price expectations, per the lender behavior documented in our SBA lender rankings.

Earnouts tied to services retention

VAR earnouts increasingly key on services and gross profit retention rather than revenue, because hardware revenue is too volatile to hit fairly. Typical constructions hold back an estimated 10 to 25 percent of consideration against twelve-to-thirty-six-month targets on services gross profit, managed-services contract renewal, or named-account retention, consistent with the size-band patterns in our earnout benchmarks. Sellers should resist earnouts denominated in hardware revenue, which the seller cannot control post-close and the buyer can influence through fulfillment routing.

Rollover equity

Sponsor-backed buyers typically ask founders to roll an estimated 15 to 35 percent of proceeds into platform equity, aligned with the patterns in our rollover equity benchmarks. In this vertical rollover carries a specific logic. The platform’s add-on arbitrage (buy at an estimated 4x to 6x, mark at a platform 7x to 9x) means the founder’s rolled dollars participate in multiple expansion the founder could not achieve independently, which is the honest pitch. Its credibility depends entirely on the platform’s real integration record, which is driver 14 above, and a founder evaluating a rollover should ask for the platform’s acquired-customer churn cohorts before signing anything.

The working capital peg

This is the most fought-over term in VAR deals, more than price itself in many processes. Hardware inventory, in-transit product, deferred revenue on prepaid support, vendor rebate receivables, and distributor payables all swing the net working capital calculation, and a peg set mechanically on a trailing twelve-month average will embed whatever anomaly that window contains. Practitioner guidance is consistent: define the peg on a normalized, hardware-cycle-adjusted basis, specify rebate receivable treatment explicitly, and agree the dispute mechanics before signing. Buyers commission quality of earnings work that includes a dedicated net working capital analysis for exactly this reason. Sellers who pre-empt it with sell-side QoE from an established provider enter the peg negotiation with their own defensible baseline instead of arguing against the buyer’s model from nothing.

Representations and warranties insurance

R&W insurance is now standard on sponsor-led deals above roughly $30 million enterprise value in this vertical, with VAR-specific underwriting attention on vendor program compliance, software licensing exposure, and public-sector contract compliance. Carrier selection and exclusion patterns are covered in our R&W carrier comparison.

The Buyer Field: Who Is Actually Bidding

Understanding who shows up in a process explains most of the pricing dispersion the bands above describe, because different buyer types price the same asset off different math.

Sponsor-backed consolidators. The deepest bid at $2M to $15M EBITDA comes from PE-backed platforms executing add-on programs. In the adjacent MSP lane the named machines include Evergreen Services Group, New Charter Technologies, and Ntiva, all tracked in our PE-MSP tracker, and several now bid on VAR and solutions provider books explicitly to run the conversion arbitrage described in the synthesis section below. In the solutions provider lane, Pellera under H.I.G. and Trace3 under Apollo are the marquee 2025 examples of sponsor conviction at scale. Consolidators price against their own platform mark, which is why competitive processes with two or more of them in the room appear to clear at the top of band.

Strategic acquirers. Print-and-imaging incumbents diversifying into IT services are a persistent strategic bid: Xerox paid $400 million for ITsavvy in 2024 per its announcement, and Ricoh bought Cenero in 2022 on undisclosed terms. Large solutions providers also buy for vendor-line depth, public-sector vehicles, and geography. Strategics can pay synergy-justified premiums, but they tend to move slowly and to retrade harder on diligence findings, especially on rebate quality.

Individual buyers and searchers. Below roughly $5M revenue the marginal buyer is an individual, frequently SBA-financed, pricing on SDE against personal debt service. SBA lender appetite documented in our lender rankings has tilted toward services-weighted books, so resale-heavy micro-VARs increasingly clear only to local competitors buying the customer list.

Who does not bid. The absence of buyers matters as much as their presence. Growth-equity and software investors generally will not touch resale gravity at any price, which caps the ceiling for even excellent pure VARs. That structural non-bid is a large part of why the estimated VAR discount persists across cycles rather than closing.

Original Synthesis: Three Derived Insights

The three analyses below are CT Acquisitions derivations. They combine the verified anchors in this report into quantities no single source publishes. They are estimates built for orientation, not appraisal, and each states its derivation so a reader can rebuild or challenge it with their own numbers.

1. The services-mix sensitivity coefficient: roughly one turn of EBITDA per ten points of services share

Take the midpoints of the three core mix bands established above for US lower-middle-market companies in 2025 through Q2 2026. A pure VAR at roughly 10 percent services share of gross profit carries an estimated midpoint of 4.0x adjusted EBITDA. A solutions provider at roughly 35 percent services share carries an estimated midpoint of 7.0x. A services-dominant integrator or cloud consultancy at roughly 65 percent services share carries an estimated midpoint near 9.5x. Fitting a line through those three points yields a slope of approximately 1.0 turn of adjusted EBITDA per 10-point gain in services share of gross profit. The plausible range around that slope is 0.8 to 1.1 turns per 10 points, given the width of the underlying bands.

The practical translation for an owner runs as follows. A $25M revenue VAR generating $2M of adjusted EBITDA that moves its services share from 20 percent to 40 percent of gross profit would, if the coefficient holds and earnings are maintained, move from an estimated 5x to an estimated 7x. That shift is roughly $4 million of additional enterprise value on unchanged EBITDA. The coefficient is not linear at the extremes. Below 10 percent services the curve flattens into commodity-fulfillment pricing, and above roughly 70 percent the business re-rates onto consulting benchmarks where bench quality replaces mix as the marginal driver. The coefficient also assumes the services are real: reclassified staff augmentation does not earn the slope, which is exactly the finding a quality of earnings review will surface in the first week of diligence.

2. The VAR-to-MSP conversion arbitrage: buying project books to build recurring platforms

The pricing gap between this report’s pure VAR band (estimated 3x to 5x adjusted EBITDA) and our MSP benchmark (6x to 9x lower middle market, 10x to 13x at platform scale) creates a mechanical arbitrage that several consolidators appear to be running deliberately. The math on a stylized $1.5M EBITDA pure VAR: acquired at an estimated 4.0x, or $6.0 million, then converted over twenty-four to thirty-six months so that managed and recurring services carry the majority of gross profit, the same earnings re-rate toward the MSP band midpoint of an estimated 7.5x, or $11.25 million. That is an estimated 87 percent gross value uplift before any earnings growth, purely from mix reclassification. Against it sit the real costs of conversion: NOC and service desk build-out, tooling, sales compensation redesign, and the customer attrition that accompanies any packaging change.

The strategic evidence is visible in buyer behavior. MSP consolidators tracked in our private equity MSP tracker increasingly bid on VAR books not for their hardware margin but for the installed customer base that can be converted to managed contracts, and the channel trade press has covered reseller-to-managed transitions as a persistent theme for years, including in ChannelE2E’s ongoing M&A coverage. For a VAR owner, the arbitrage cuts both ways. Sell as a VAR and the buyer captures the conversion spread. Convert first and sell into the MSP band, and the owner captures it, at the price of two to three years of execution risk and suppressed earnings during the build. The honest break-even question is whether the owner’s conversion execution would beat the estimated two-to-four-turn discount they accept by selling unconverted, and for owners without prior managed-services operating experience, the evidence suggests it frequently would not.

3. Quantifying the AI-infrastructure resale tailwind: real gross profit dollars, cautious multiple credit

The demand side is measurable. Canalys forecast 7.7 percent global IT spending growth for 2025 with AI-related categories leading per its forecast commentary. CDW grew net sales 6.8 percent in 2025 against a down prior year per its earnings release. Softcat grew gross invoiced income 26.8 percent in FY2025 partly on large infrastructure projects per its preliminary results. SHI crossed $16 billion in trailing gross sales while making an AI-focused acquisition per its October 2025 announcement.

The valuation credit, by contrast, appears limited. If AI-infrastructure demand were being capitalized as a durable re-rating, the disclosed platform print of the era would sit well above the middle-market average. Instead Converge cleared at approximately 7.4x against a GF Data all-industry average of 7.5x in Q3 2025, essentially no premium. Our derived estimate is that current AI-infrastructure exposure earns an estimated half turn to one turn at most for lower-middle-market sellers who can document it as gross profit rather than just revenue, and only where it attaches services: GPU cluster design, data-center power and cooling integration, AI-ready network upgrades with multi-year support. Buyers who lived through the 2020 to 2022 supercycle are normalizing one-time AI hardware surges out of adjusted EBITDA in diligence, so a seller whose AI story is boxes rather than practice-building should expect the surge to be pegged as non-recurring. The asymmetry suggests the rational seller strategy is to convert AI-infrastructure demand into contracted managed and support revenue before a process, which routes the tailwind through the services-mix coefficient in insight 1, where the market demonstrably pays.

Methodology

Earnings conventions, kept strictly separate. This report quotes three bases and never blends them. SDE (seller’s discretionary earnings) applies to owner-operated companies below roughly $5M revenue, where one owner’s full compensation and benefits are added back. Adjusted EBITDA applies to professionally managed companies, with normalizations for owner compensation to market rate, one-time items, and non-operating expenses. Trailing gross profit multiples appear only where the channel convention applies, and every gross profit multiple in this report is labeled as such. An SDE multiple and an EBITDA multiple on the same company can differ by 40 percent or more for identical economics, so cross-report comparisons must confirm the basis before comparing numbers.

The VAR gross-profit convention, explained. VAR revenue is structurally misleading in two directions. First, hardware resale is pass-through volume: a $30M revenue VAR at 10 percent product margin controls only $3M of economics. Second, revenue recognition splits the category. Hardware is typically recognized gross (principal), while software, cloud, and some support contracts are recognized net (agent), so reported revenue collapses as mix shifts to cloud even when the business grows. Softcat’s separate disclosure of £3.6 billion gross invoiced income against much smaller statutory revenue per its FY2025 prelims is the public-market treatment of the same problem. Channel acquirers therefore size targets on trailing gross profit and price on adjusted EBITDA or on gross profit multiples. Where this report quotes a gross profit multiple, it is stated in its own column or clause, never mixed into an EBITDA range.

Triangulation hierarchy. Disclosed transaction prints anchor first, and the Converge/H.I.G. print at approximately 7.4x TTM adjusted EBITDA is the primary 2025 anchor. Subscription databases provide the distribution around anchors: GF Data for PE-sponsored deals of $10M to $500M enterprise value, DealStats for NAICS 541512 and 423430 transaction records, BizBuySell and IBBA Market Pulse for Main Street and lower-middle-market survey data, and PitchBook for sponsor activity. Sector intermediaries provide deal-flow texture: martinwolf, Corum Group, Software Equity Group, and Houlihan Lokey. Channel research frames the operating benchmarks that drive pricing: CRN, Canalys, CompTIA, Service Leadership, Gartner, and IDC, with Service Leadership’s services-mix profitability benchmarking the canonical operating reference for the solutions provider transition.

Known biases. Reported transaction data over-represents completed, successful deals (survivorship), better-quality companies (selection), and larger deals (disclosure). Survey data reflects intermediary optimism. Public comparables embed liquidity, scale, and governance premiums that do not transfer to private lower-middle-market companies. All ranges are therefore stated conditionally, and the honest reading of any band in this report is “well-run companies that transacted appear to have cleared here,” not “your company is worth this.”

What this report is not. Not an appraisal, not a fairness opinion, not investment advice, and not a substitute for engagement-specific work. Owners planning a sale should pair this benchmark with a sell-side quality of earnings and a transaction-specific valuation. A first-pass orientation is available through our business valuation calculator.

Source Quality Ranking

Tier 1 (subscription transaction databases; strongest for distribution, weakest for vertical granularity). GF Data reports PE-sponsored deal pricing with contributed, verified data but limited IT-channel slicing. DealStats offers NAICS-coded private transaction records including 541512 and 423430, with variable data quality on smaller deals. BizBuySell and IBBA Market Pulse cover the Main Street end via broker reporting. PitchBook tracks sponsor activity comprehensively but estimates undisclosed terms.

Tier 2 (channel and sector specialists; strongest for vertical texture). martinwolf is the canonical VAR and IT-services M&A intermediary, and its quarterly commentary is the closest thing to a vertical benchmark series that exists. CRN’s Solution Provider 500 is the canonical channel scale ranking. Canalys and IDC quantify channel demand. CompTIA and Service Leadership benchmark operating economics. Corum Group, Software Equity Group, and Houlihan Lokey publish tech-services deal commentary. ChannelE2E provides the deepest running deal log for channel M&A.

Tier 3 (public filings and disclosed transactions; strongest verification, ceiling context only). CDW, Insight Enterprises, Connection, ePlus, and Softcat filings are audited and precise, but they describe companies one to three orders of magnitude larger than lower-middle-market sellers. Disclosed deal terms (Converge/H.I.G., Xerox/ITsavvy) are the highest-quality private-market evidence available and are weighted accordingly.

Excluded. Unsourced broker blogs, listicle multiple charts without stated methodology, and any figure whose earnings basis, vintage, or geography could not be established.

Journalist Resources

Press summary (150 words)

Value-added resellers and IT services firms are pricing along a single dominant axis in 2026: services mix. New benchmarking from CT Acquisitions places resale-heavy VARs at an estimated 3x to 5x adjusted EBITDA in the US lower middle market, solutions providers at 6x to 8x, and cloud consulting specialists at 8x to 11x. The gap means a services transition can be worth more than a decade of organic growth. The report’s anchor print is H.I.G. Capital’s 2025 take-private of Converge Technology Solutions at approximately 7.4x trailing EBITDA and a C$1.3 billion enterprise value, essentially level with GF Data’s 7.5x middle-market average, evidence that scale alone does not cure resale gravity. The report also quantifies a conversion arbitrage: consolidators buying VAR customer bases at VAR prices and re-rating them onto MSP benchmarks of 6x to 9x. AI-infrastructure demand is lifting channel revenue, but buyers are crediting it cautiously.

Five headline options

1. VAR Valuations 2026: Why Services Mix Is Worth One Turn of EBITDA Per Ten Points
2. The 7.4x Print: What the Converge Take-Private Told Every IT Reseller About Their Exit
3. IT Resellers Face a Two-Speed Market: 3x for Boxes, 11x for Cloud Benches
4. The VAR-to-MSP Arbitrage: How Consolidators Buy Project Revenue and Sell Recurring
5. AI Hardware Is Flooding the Channel. Acquirers Are Pricing It Like a Sugar High.

Frequently asked questions

What is a typical EBITDA multiple for an IT VAR in 2026? US lower-middle-market VARs with resale-heavy books are estimated at 3x to 5x adjusted EBITDA in 2025 through Q2 2026, while solutions providers with 20 to 50 percent services share are estimated at 6x to 8x, per triangulation of GF Data, DealStats, and martinwolf commentary. Mix, not size, sets the band.

Why are VARs valued on gross profit instead of revenue? Hardware resale is pass-through volume, and cloud resale is often booked net under agency accounting, so revenue is not comparable across VARs. Buyers size targets on trailing gross profit and price on adjusted EBITDA, with a separate gross profit convention of an estimated 0.3x to 0.6x for resale-heavy US books in 2025 through Q2 2026.

What was the Converge Technology Solutions take-private multiple? H.I.G. Capital’s acquisition, announced February 7, 2025 and closed April 22, 2025, valued Converge at C$5.50 per share, approximately C$1.3 billion in enterprise value, and approximately 7.4x trailing-twelve-month adjusted EBITDA to September 30, 2024, per the company’s announcement.

Do VARs sell for less than MSPs? The evidence suggests yes, materially. Comparable-size lower-middle-market MSPs are benchmarked at 6x to 9x adjusted EBITDA against an estimated 3x to 5x for pure VARs, a gap of roughly two to four turns attributable to contracted recurring revenue.

How does services mix change a VAR’s valuation? The derived sensitivity in this report is approximately one turn of adjusted EBITDA per 10-point gain in services share of gross profit, holding earnings constant, within the 10 to 70 percent mix range. Outside that range the relationship flattens at the bottom and re-rates onto consulting benchmarks at the top.

What earnings basis applies to a small owner-operated VAR? Below roughly $5M revenue, deals are conventionally priced on SDE at an estimated 2.0x to 3.5x for US books in 2024 to 2025, not on EBITDA, because owner economics dominate. The two bases should never be compared directly.

How is AI infrastructure demand affecting VAR valuations? Channel revenue is clearly rising, with Canalys forecasting 7.7 percent IT spending growth for 2025 and CDW growing 6.8 percent. Multiple credit appears limited to an estimated half turn to one turn, and only where AI demand attaches documented services gross profit rather than one-time hardware surges.

What deal structures are common in VAR sales? Typical US structures in 2025 through Q2 2026 combine an estimated 60 to 80 percent cash at close with seller notes, earnouts keyed to services gross profit retention at 10 to 25 percent of consideration, and sponsor rollover of 15 to 35 percent. Xerox’s ITsavvy purchase, at $180 million cash plus $220 million in secured notes, is a rare disclosed example of heavy note structure.

Why is the working capital peg such a fight in VAR deals? Hardware inventory, in-transit product, rebate receivables, and distributor payables swing net working capital sharply between quarters, so a peg set on an unadjusted trailing average embeds whichever anomaly the window contains. Normalized, hardware-cycle-adjusted pegs with explicit rebate treatment are the practitioner standard.

Is this report a valuation of my company? No. It is market research with conditional, estimated ranges, not an appraisal and not advice. A transaction decision requires company-specific work, starting with quality of earnings and a purpose-built valuation.

Related Research

This spoke rolls up to the cluster pillar, IT and Managed Services M&A Multiples 2026, which frames the full vertical from resale through managed and security services.

Sibling spokes in the cluster:

• MSP M&A Multiples 2026: the recurring-revenue comparison baseline used throughout this report.
• MSSP M&A Multiples 2026: the security-services sibling, where the security premium over general managed services is quantified.

Supporting research referenced in this report:

• Private Equity in the MSP Market 2026: the consolidator roster behind the VAR-to-MSP arbitrage.
• Quality of Earnings: rebate normalization, staff-augmentation reclassification, and working capital analysis.
• How Owner Dependency Affects Valuation: the mechanics behind driver 12.
• Business Valuation Calculator: a first-pass orientation tool, not a substitute for engagement-specific work.
• SBA Acquisition Lender Rankings 2026: financing context for sub-$5M deals.
• Founder Earnout Benchmarks by Deal Size 2026: the structure evidence behind the earnout section.
• Founder Rollover Equity Benchmarks 2026: rollover ranges by deal size.
• QoE Provider Comparison 2026: choosing a diligence provider.
• R&W Insurance Carrier Comparison 2026: carrier selection and exclusion patterns.

Build Notes Appendix

• Voice gates: zero em-dashes and zero en-dashes anywhere in this document, including the title; zero hits against the CT voice-gate exclusion set (checked for all listed AI-tell terms and their stems); every numeric claim carries a named, hyperlinked source at first mention.
• Three Kings readiness: the target keyword family “IT services and VAR M&A multiples” appears in the post title, is available for the H1 and Yoast title, and appears in the opening substantive paragraph. Final on-page verification runs at publish via tools/three_kings_gate.py.
• Earnings-basis discipline: SDE, adjusted EBITDA, and gross profit conventions are labeled at every occurrence and never blended within a range.
• Named-deal discipline: the only named-deal multiple stated is publicly disclosed (Converge/H.I.G. at approximately 7.4x TTM adjusted EBITDA, C$5.50 per share, ~C$1.3B EV, closed April 22, 2025). Xerox/ITsavvy ($400M; $180M cash plus $220M notes; closed November 2024) is cited for structure and appetite only. Presidio/CD&R (agreed April 2, 2024) and Trace3/Apollo (agreed August 2025, closed November 2025) are undisclosed and flagged as such. SHI and WWT figures are scale context only.
• Corrections against the build brief: the brief referenced “Xerox/ITsavvy 2022”; verification shows GenNx360 acquired ITsavvy in 2022 and Xerox acquired it for $400 million in November 2024, so the report uses the verified 2024 date. The brief’s “Converge ~$910M” figure is the approximate US-dollar conversion of the disclosed C$1.3 billion enterprise value; the report states the Canadian-dollar disclosure as primary. The brief’s “Trace3/American Securities” pairing is stated with its verified dates: American Securities entered in 2021 and the Apollo exit closed in November 2025.
• Conditional voice: all non-disclosed ranges use estimated, appear, or suggest framing; running prose holds to one statistic per sentence, with the standard table and derivation exceptions.
• Internal links: pillar link UP to /guides/it-managed-services-ma-multiples-2026/ (LIVE, id 44562); sideways to the MSP spoke (LIVE, id 44564) and to the MSSP spoke at /guides/mssp-ma-multiples-2026/, which is publishing in parallel in this batch; cross-links to the PE-MSP tracker and supporting assets verified against the confirmed asset list.
• Not-advice framing: present in the opening front matter, in the methodology section, and in the final FAQ.

Prepared July 2026 for ctacquisitions.com. Research compilation only; not an appraisal and not advice.