Just thought I'd throw some misc info out there for folks looking to buy an MSP, based on recent conversations and questions. By no means a complete guide, but maybe a little bit helpful for people just getting started.

It all comes down to the numbers of course, but an MSP's stock in trade is really people, so I'm going to focus on that a bit more.

Stuff to look for, in no particular order:

- having no sales team but slow and steady growth is a sign of gold. It means the engineers are good enough that the growth is coming by word of mouth, just add salespeople to accelerate the curve! But make sure you can get more engineers to support it, very easy to get out over your skis and lose(!) the good engineers you started with due to burnout if you're just looking at the money. If that happens then your lovely rocket becomes a turn-around scenario right quickly. (Good engineers are in high demand and customers tend to follow them.)

- if there are salespeople look for a bare minimum ratio of 2x engineers per salesperson, preferably more, (5x or 10x is good, even 20x is possible). If it's less than 2x then there's definitely some dead weight on the sales team.

- overall, margins should be 25% minimum, preferably closer to 40%.
Less than 25% margin is actually good as it's almost always a sign of mis-management which should let you negotiate the purchase price down and reap a tidy profit once the bugs are worked out.
50% or above is technically possible with incredibly efficient automation etc, but unless there's some obvious additional revenue stream that's not the usual MSP fare it's more likely a sign that the books are being cooked.

- engineer hours should be billing at 50% minimum, but not more than 80%. The other 20+% is needed for maintaining internal systems, learning new products and technologies, misc admin overhead etc. If you see more than 80% then more engineers are needed asap and current team may be getting burned out, (has there been higher staff turnover recently?) Also watch for "technical debt" (deferred maintenance etc) internally and slippage/exposure in customer maintenance agreements.

...plenty more of course, but then we start getting into nuances of deployed technologies, market sector focus etc.

Speaking of market sectors though, it's good if an MSP has a focus on one or two in particular as every industry has "vertical apps" that are special and unique and there's always a shortage of experts so being able to service those is a good way to lock in a customer-base.

In general, these are the industries with the biggest IT budgets, (in no particular order):
========= Accounting Insurance Financial Legal Leasing Real Estate Medical/Dental Engineering Manufacturing =========== Technology companies aren't listed only because most organizations in that space tend to handle their own needs, not usually much room for an MSP. There are other exceptions as well of course, e.g. Transportation isn't on there as overall those companies spend the least of all, yet Airlines would be the exceptional sub-category. Similar exceptions for Construction and there's a big difference between Commercial Real-estate firms vs Residential, etc...