$400K-$500K EBITDA IT Managed Service Provider

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by a searcher from University of Florida
in Houston, TX, USA

1yr ago

$400K-$500K EBITDA IT Managed Service Provider

Hi Everyone,
In the past, I've seen some chatter on multiples for IT Managed Service Providers. Anyone have the latest insight on multiples for IT Managed Service Providers with $400K-$500K EBITDA? Little to no assets, no internal IP or software coming with it.

They do both IT consulting and managed services - the $400k-$500K EBITDA is for their managed services. Another $100K or so in consulting services.

Many thanks in advance for any insight.

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reply by a searcher 1yr ago
from London Business School in New York, NY, USA

Hey Charity, I'm a former Sr IT executive and I have been looking at deals in the space for over 12 months - in short, it's a sellers market: highly competitive and multiples ranging from 5-8X; strategics seem to be most aggressive bidders; and finally be very careful with customer concentration and key person risk (not unusual to see the whole family in the biz). Happy to share more - feel free to DM. Best of luck! Halley

reply by a searcher 1yr ago
from Brigham Young University in Dallas, TX, USA

Hi Charity - I have had many people tell me that there are no opportunities below 8x. I bid 5x on a $1.8m ebitda opportunity and lost out by just a little (5.2x). At the size you’re looking I would just see what makes the most sense to you. It likely won’t be below 4x but every deal is unique and as an investor you are looking “for a deal”.