What Drives MSP Valuations and Acquisitions in 2026

Edited transcript of a fireside chat with Marvin Ma and Jon Roth of The DAK Group

Original webinar: Beyond the Multiple: What’s Really Driving MSP M&A in 2026
Host: U.S. Pan-Asian American Chamber of Commerce
Recorded September 24, 2026

What makes a managed service provider attractive to a buyer? How can an owner improve the business before a sale—and protect the value of an offer once due diligence begins? In this conversation, Marvin Ma and Jon Roth of The DAK Group examine the financial, operational and personal decisions involved in selling an MSP.

The fireside chat was hosted by the U.S. Pan-Asian American Chamber of Commerce Education Foundation (USPAACC), a national nonprofit founded in 1984. USPAACC supports Pan Asian American businesses and businesses of all backgrounds through education, business development and connections to corporate and government opportunities.

Marvin Ma is a Vice President and M&A advisor at The DAK Group. He advises privately held business owners on company sales, acquisitions and capital decisions. As the interviewer, Ma connects the discussion to the questions owners face when assessing their business and preparing for a transaction.

Jon Roth is a Director and M&A advisor at The DAK Group. His background includes operating technology businesses, startups and corporate development, with transaction experience across technology, media and telecommunications, including MSPs, IT services and software as a service.

This transcript has been edited for clarity and length. Filler words, repetition, technical setup and unrelated exchanges have been removed. Speaker contributions and the substance of the discussion have been preserved. Market observations reflect the September 24, 2026 conversation.

How MSP buyers have changed

Marvin Ma: Thank you to the U.S. Pan-Asian American Chamber of Commerce for hosting us and for the work you do to support and connect business owners.

I’m Marvin Ma, a Vice President at The DAK Group, an investment bank focused on middle-market mergers and acquisitions and advisory services. We help business owners understand what their company is worth, consider when to bring in capital, sell or acquire a business, and identify the right partner. DAK has completed more than 800 transactions across 42 states and 28 countries.

I’m joined by my colleague Jon Roth, a Director at DAK. Jon brings experience in technology, media and telecommunications, with a focus on MSPs, IT services and SaaS. He has worked on dozens of transactions in the space and understands what buyers look for and how these businesses get valued.

Jon Roth: My background has always been in technology, media and telecommunications, including startups and corporate development. As the MSP market evolved, it was a natural fit.

The biggest change has been buyer sophistication. Five years ago, recurring revenue itself attracted attention and could drive valuation without as much examination of the whole business.

Today, buyers investigate the quality of that revenue. They examine retention, margins, customer concentration, organic growth, contracts and dependence on the founder. The question has become whether the recurring revenue is high quality and whether the business can scale.

What makes managed service providers different?

Jon Roth: Marvin, you’ve worked across many middle-market sectors. What makes MSPs stand out compared with other industries?

Marvin Ma: The first thing that comes to mind is that people in this industry tend to be data driven. Buyers and investors focus on the data behind recurring revenue, profitability and key operating metrics.

Contracts are another important part of the discussion. Do you have contractual agreements with your customers? Is the recurring revenue supported by those agreements, and what is its quality?

AI and cybersecurity also have to be part of the conversation. AI is affecting every industry, but MSPs and IT services businesses are particularly close to the changes. Security has been a concern for decades, and AI is creating additional implications for the industry and its customers.

Who is buying MSPs and what they want?

Marvin Ma: Where are we in the consolidation cycle? Who is acquiring MSPs, and what are the active buyers looking for?

Jon Roth: We’re well into the consolidation cycle, but it isn’t over. There are many private equity-backed platforms, and they are increasingly selective about the MSPs they acquire.

They want an acquisition to add something: geography, industry expertise, cybersecurity or cloud capabilities, enterprise customers or talent.

Adding earnings alone is no longer enough. A business needs something distinctive and sustainable. Buyers want growth potential supported by a baseline of dependable earnings that they can evaluate and combine with their other portfolio companies.

International buyers and access to the US market

Marvin Ma: Are you seeing more foreign buyers in IT services and MSPs? We’re seeing international companies interested in entering the United States.

Jon Roth: There is competition beyond our borders. I wouldn’t say there is a specific trend in international MSP buyers that we can necessarily put on a chart, but owners need to recognize that this is a global market.

Many private equity groups pursuing MSP acquisitions have been domestically based. There are also participants in Asia-Pacific, Europe, the Middle East and other regions. Businesses around the world need the trust, service and security an MSP provides.

Marvin Ma: What about international strategic buyers? We’ve seen companies looking beyond their domestic markets and using acquisitions to support a global growth strategy.

Jon Roth: We can point to cross-border transactions where a buyer’s conclusion was that building a presence in the United States wasn’t the right approach; it needed to acquire a business. The questions then become which company is the right fit and how to integrate it.

We’ve seen that interest from India and other parts of Asia-Pacific, as well as European buyers. In the activity I’m describing, we’ve seen more from Asia and South Asia than Europe. India’s business process outsourcing model is different from the MSP model, but there are similarities in a third party taking responsibility for important business processes.

Marvin Ma: We also advised a client on the sale of a platform to a European competitor. These opportunities extend beyond domestic private equity buyers.

Why recurring revenue earns different valuations?

Marvin Ma: What separates an MSP at the lower end of the valuation range from one at the top? How do buyers judge the quality of recurring revenue?

Jon Roth: MSPs can be worth very different amounts. A premium business usually has substantial recurring revenue, low customer churn, good margins, organic growth, limited customer concentration, strong management and an effective sales operation.

Recurring revenue is not automatically good revenue. Buyers ask whether it is contracted, whether customers stay, whether it is profitable and whether it is diversified. They also look at payment terms, including prepaid monthly service contracts where cash is received before revenue is recognized.

How essential are you to your customers? We’ve seen strong buyer interest in MSPs serving compliance and regulatory needs. An MSP may effectively become a customer’s outsourced chief information security officer. It is involved in security, regulatory requirements and risk management, making the relationship more deeply embedded in the customer’s operations.

Marvin Ma: Buyers look beyond the total revenue figure. How much is recurring, and how much is one-time work? Who are the customers? Is revenue concentrated, and what are the contract terms with those major accounts?

Owners should examine their revenue components, understand where growth has come from and identify the risks that could affect revenue quality.

Jon Roth: Buyers may segment the valuation. If you have contracted, prepaid recurring revenue alongside one-time services, they may value those portions differently. The one-time contracting or project business generally trades at a lower multiple.

It is important to think about your revenue profile, the quality of each component and how a buyer will evaluate it.

Looking at business value through the eyes of a buyer

Marvin Ma: Owners often have a number in mind when they think about selling. From my own entrepreneurial experience and my experience with family businesses, I know how much of that reflects the years of work and personal sacrifice invested in the company. How do we bridge the gap between an owner’s view and a buyer’s view?

Jon Roth: You should know what would make a sale worthwhile for you. But you also have to connect that to what your business is worth to the buyer.

Look at the company through the eyes of each potential buyer. The case for its value has to explain what the business can do for that buyer after ownership changes.

Marvin Ma: Buyers are buying the future. That makes predictability in future performance important to a sale process.

Jon Roth: Exactly. Buyers look at earnings stability, revenue quality and margins. Are your gross profit and EBITDA margins in the expected range? Are employee costs and other expenses consistent with what a buyer would expect?

Once you understand that financial profile, you need to show what is compelling about the future. To earn the strongest value, you have to credibly demonstrate how your company can help the buyer generate future profits and earnings.

How MSPs can improve their economics?

Marvin Ma: Why do software as a service businesses generally trade at higher valuations, and can an MSP narrow that gap?

Jon Roth: SaaS businesses can often scale without adding employees at the same rate as revenue. That can create higher margins and operating leverage. Customers may also become dependent on the software and be reluctant to leave unless something goes wrong.

An MSP can work toward some of those characteristics by standardizing delivery, automating repetitive work, building proprietary tools and growing revenue faster than headcount.

The goal is to improve the economics within your MSP. The more you can combine those efficiencies with the strengths of your service business, the more value a buyer may see. It takes focus and planning, but it is achievable.

AI opportunities for MSP operations and customer services

Marvin Ma: Is AI a threat or an opportunity for MSPs? How are buyers looking at it?

Jon Roth: It is both, but I think the opportunity is greater. Internally, AI can automate routine work, make technicians more productive and improve margins.

The larger opportunity may be with the customer. Middle-market companies need help deploying AI securely, governing their data and identifying useful applications. MSPs are well positioned to help because they already have the customer’s trust.

When technology changes this quickly, people become anxious about what it means for them. An MSP is already managing technology and, in the case of a managed security service provider, may also be managing security, compliance and regulatory needs.

That existing relationship gives the MSP an opportunity to help lead the customer’s AI strategy.

Marvin Ma: Not everyone within a customer’s organization has the technical knowledge to evaluate or implement AI. Having qualified people help them implement it, set appropriate parameters and do it securely will be important.

What can cause an MSP deal to fail or the price to fall?

Marvin Ma: You’ve worked on dozens of technology and IT services transactions. What most often causes an MSP deal to fail or get repriced? What should owners do if they want to sell or take some money off the table in the next 2–3 years?

Jon Roth: Deals usually get repriced when due diligence reveals that the buyer isn’t getting what it thought it was paying for.

For example, the reported EBITDA may not hold up under a quality of earnings review. Recurring revenue may be less dependable than expected. Revenue recognition may be incorrect.

A buyer might find that revenue recorded in 2026 should have been spread into 2027. That changes the profitability on which the offer was based. Other issues include weak contracts, too much dependence on the founder, excessive customer churn or greater customer concentration than the buyer expected.

These issues can be addressed beforehand, but they have to be identified. After discussing what is going well, owners need to ask what could hurt the business in a buyer’s review.

Once a letter of intent is signed, negotiating leverage shifts toward the buyer. That is typically when outside specialists examine the finances, technology and operations in greater detail.

Early buyer interest does not involve the same level of scrutiny. Eventually, everything will be examined closely. Owners need to investigate the underlying structure of the business and identify what could undermine the offer.

How an advisor manages the sale process

Marvin Ma: Let’s explain how investment bankers generally run a sale process.

The first step is understanding the business. We have multiple conversations with management and the owners to identify its core value and what will make it attractive to buyers.

We then identify potential buyers and determine which groups to approach. We seek indications of interest, arrange management meetings so the parties can get to know each other, and move toward a letter of intent.

After that come confirmatory due diligence, negotiations and the final closing. The banker and client work through that process together.

Jon Roth: The MSP acquisition process is broadly similar to other industries. A difference is that a private equity-backed buyer that has already acquired several MSPs may know very precisely how your company would fit with its other businesses.

Preparation comes first. An advisor needs to help you get ready, examine the potential buyers realistically and sometimes creatively, and explain why particular buyers may be right for your business.

You need a credible account of the company’s history, current performance and future opportunity. Assuming the market is receptive to your particular business, that gives you a basis for attracting buyers, managing bidding and choosing a buyer with confidence in the price and terms.

The advisor should lead much of the transaction work. You still have a business to run. The last thing you, the advisor or the buyer wants is for day-to-day performance to suffer because you are spending too much time on the sale.

Comparing cash earnouts and rollover equity

Marvin Ma: How are MSP transactions being structured? What should owners understand about cash, rollover equity and earnouts?

Jon Roth: There is generally a substantial cash component. We often see a combination of cash and rollover equity. Buyers also commonly propose earnouts, and an advisor can help evaluate whether cash and an equity component would be preferable.

Do not focus only on the headline price. A dollar of cash at closing has a different risk profile from a dollar that depends on an earnout. Rollover equity is an investment, rather than cash you receive at closing.

If an offer includes rollover equity, examine the buyer’s debt, capital structure, governance and the path to eventually receiving cash for your investment. If you are staying after closing, you are also choosing your next business partner.

Suppose an offer is 80% cash and 20% rollover equity. For that 20%, you are becoming an investor in the buyer’s business. You need to investigate its plan and decide whether you believe the investment can be worth what the buyer suggests. Both parties need to evaluate each other.

Advisory services fees and experience as business owners

Audience question: Does The DAK Group advise buyers or sellers, and how are its fees structured?

Jon Roth: DAK primarily advises owners selling their businesses, and we also advise companies making acquisitions. Helping a company acquire other businesses can deepen our understanding of that client and support a later sale.

Acquisitions can add revenue and earnings, increase the value of the company and help us understand how to present its strengths to the market.

Our fee approach typically includes a retainer during preparation and the transaction process, with a substantial portion of our compensation coming from a percentage-based success fee when a transaction closes. In some arrangements, compensation can increase if we exceed agreed expectations.

Marvin Ma: Our experience advising sellers also helps us advise buyers. We understand how privately held business owners think, the differences in experience between buyers and sellers, and the cultural considerations involved.

Fees for acquisition advisory are structured differently from fees for a company sale. We need to understand the assignment before discussing pricing. It is a case-by-case conversation.

Jon Roth: Before moving into investment banking, I operated technology businesses. That helps me understand a client’s technology, product development and plans for the market, as well as the personal decisions involved in selling.

DAK has people who have operated and exited businesses before becoming bankers. We understand what it is like to sit on the owner’s side of the table, including the emotional aspects of the process.

How business size affects the potential buyer pool

Audience question: How large does an MSP need to be for private equity buyers to consider it?

Jon Roth: It helps to think about different buyer pools. At less than $500,000 in EBITDA, a company is less likely to be acquired by private equity. Individuals, family offices and smaller strategic buyers are more likely prospects.

At $500,000 to $1.5 million in EBITDA, larger regional strategic buyers may take an interest. Private equity-backed platforms may also consider the business as an additional acquisition that serves a particular role within their group.

At $2 million to $3 million in EBITDA, there is strong appetite from private equity-backed platforms acquiring entrepreneur-owned MSPs, as well as larger strategic buyers.

At $3 million to $5 million, the company may attract more premium private equity-backed platforms, institutional buyers and strategic buyers that compete more aggressively on price.

You do not necessarily need an exceptionally large amount of EBITDA to be of interest to a private equity-backed platform.

Preparing an MSP for sale and deciding when to sell

Audience question: What steps help an owner prepare for a sale, and how do you know when the business is ready?

Marvin Ma: We have a resource on the 12 critical steps before selling a business. One idea we discuss often is to run the company as though you will own it indefinitely, while being prepared to sell tomorrow.

Jon Roth: That is a favorite expression of our CEO, and after decades as an operator and banker, I agree with it.

Sometimes a legitimate buyer approaches unexpectedly with a serious offer. If your metrics, contracts and revenue records are not in order, it can be difficult to respond smoothly. That can cost you buyer interest or value.

Deciding when to sell involves market conditions and the stage of your company’s development. It is also personal. A good market and a business that could sell do not answer whether you want to sell.

You also need to assess your progress. Are the key performance indicators moving in the right direction? What does the sales pipeline look like? An advisor can help you understand how your business compares with the market and what needs attention. The personal decision remains yours.

Marvin Ma: Financial readiness includes record keeping. Can you produce three years of historical performance and demonstrate the company’s actual profitability?

Jon Roth: One of the biggest sources of price reductions is financial information that was not in order when the buyer became involved. The buyer’s accounting team may identify errors and recommend reducing the purchase price. Advance preparation can help owners avoid that situation.

Marvin Ma: Next, decide whether you want to stay with the company or exit completely. If you plan to leave, do you have a capable management team to support that?

Review customer concentration and whether it can be addressed beforehand. Look at the business as though you were the buyer. Are vendor, customer and employee contracts valid, signed and accessible?

Be analytical about the numbers and speak with others in the industry. Your advisory team should include your accountant and attorney as well as your investment banker. A successful closing takes a team.

Jon Roth: You need an experienced M&A lawyer, the right accounting support and banking advice. Choosing the right team and preparing early gives you the best chance to maximize price and terms when you are ready to sell.

Choosing the right buyer and getting advice early

Jon Roth: You have spent years, perhaps decades, building your business. Experienced advisors can help you understand the transaction process, metrics and timing. Your own judgment also matters.

If you prefer one buyer over another, consider why. A higher offer may not be the best choice if you will remain with the company for several years and work with that buyer every day. Trust your judgment, listen to your advisors and be prepared.

Marvin Ma: Speak with an investment banker early. It does not have to be us. Understand the process before you need to go through it.

Thank you to Jon, the Chamber and everyone who took time from their workday to participate.