MSP Benchmarking // Service Leadership, QoE Providers

March 30, 2025

by a searcher from Duke University - The Fuqua School of Business in Greensboro, NC, USA

I am looking at an MSP company that is doing $1m in SDE ($0.8m in adj. EBITDA). There is a broker involved who has valued the company based on "Service Leadership" benchmarking reports - an MSP IT industry resource. I wanted to see if I could get advice:

1. How reliable are the Service Leadership benchmarks? (And do you recommend another source)
2. Is it common to value MSPs under $1m in cash flow using an EBITDA margin multiple and/or multiples applied to the breakdown in revenue (eg MSP, Hardware Sales, Project etc) as opposed to the more traditional approach of using a multiple of adj EBITDA?
3. Can anyone recommend a QoE provider that specializes in MSP deals?

Thank you,
Rob

Reply by a searcher
from Duke University in Adelaide SA, Australia

Hi Rob, do you mean the ConnectWise Service Leadership Index reports? I personally think that methodology is excellent, although sometimes there might be a lot of work required to understand and classify revenue depending on the sophistication of the MSP. Obviously, you will review the brokers assertions etc. In conjunction with standard analysis around customer concentration etc, I think the breakdown of revenue might be even more important in a smaller deal; easier to build-out project and hardware revenue (if desired) from a broad customer base with MSAs, lots of risk if EBITDA all derived from projects or hardware etc. I'm bought an MSP in Australia so no relevant leads for QoE providers. Happy to help with advice if you pursue this deal - feel free to reach out directly.

Reply by a searcher
from Columbia University in New York, NY, USA

Hi Rob, service leadership is very well respected in the industry, and this valuation method is basically the standard (though you’ll see variation in how it’s applied). It’s a hot sector with lots of sophisticated buyers, so expect to see more complex valuation methods than in some industries.
for what it’s worth, what the broker is suggesting is functionally the same as applying a multiple to EBITDA. Higher quality revenue = higher multiple - and service/hardware/software mix is how you measure revenue quality in MSPs.

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