Multiples for an MSP in the Northeast

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October 12, 2021

by a searcher from Harvard University in Boston, MA, USA

I am looking at an Information Technology - Managed Services Provider (MSP) based in the Northeast that does roughly $8.5 mm in revenue and $1mm in SDE. What and how are people evaluating these types? I've read between 4-5x SDE? What are other methods that are being utilized and what is the market paying for these types of companies?

Thank you.

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Reply by a searcher
from Massachusetts Institute of Technology in Boston, MA, USA
We've looked at a few - at one firm (similar EBIDTA range), the sellers were looking at a minimum 6X and looking purely at strategic/industry buyers - i think they sold it at 6X+. Multiple would naturally be dependent on several factors but primary factors include - % of revenue recurring, % of customer retention, customer concentration and also on type of revenue - managed revenue/reactive revenue/product re-sale revenue.
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Reply by a searcher
from Queens University in Edmonton, AB, Canada
I’ve heard that MSPs typically trade at higher multiples as they operate with a recurring revenue model. I’ve seen a number of PEs doing roll ups in the space which might be contributing to the multiples inflating
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