Managed IT Services (MSP)
Every business needs IT support. Most overpay for mediocre service.
Managed IT Services Providers (MSPs) offer proactive IT support, network management, security monitoring, and helpdesk services to small and medium businesses under recurring monthly contracts. Unlike break-fix IT shops that charge by the hour, MSPs generate predictable recurring revenue ($2,000–$8,000+ per client monthly). The economics are compelling: customer acquisition is high upfront, but once in place, clients rarely leave (switching costs are high). MSPs trade at 3–5x EBITDA on exit because of recurring revenue predictability. The secret: 85%+ of revenue should be recurring (managed services contracts), not one-time project work. Successful MSPs scale by adding technicians and targeting specific verticals (law firms, healthcare, nonprofits).
Avg Revenue
$800K
Profit Margin
32%
Acquisition Multiple
2.5x - 5x
Startup Cost
$40K - $150K
Difficulty
3/5
How It Works
MSPs monitor client networks 24/7 using remote management software, provide helpdesk support, handle security/compliance, and manage infrastructure. Revenue is primarily recurring monthly contracts ($2,500–$8,000 per client depending on size and scope) plus ancillary work (security consulting, migration projects). Profitability improves as client count grows — the tech stack is fixed, so each new client is nearly 100% contribution margin after initial onboarding.
Revenue Range
Pros
- +Highly predictable, recurring monthly revenue (85%+ of contracts)
- +High customer retention — switching MSPs is disruptive for clients
- +Scales without proportional cost increase — adds technicians, not infrastructure
- +Clients often stay 5+ years, generating $150K–$500K+ lifetime value per relationship
- +Venture-backed acquirers pay 3–5x EBITDA due to recurring revenue model
- +Can target specific verticals (healthcare, legal, nonprofits) for premium pricing
Cons
- -High customer acquisition cost (sales + onboarding) — often $10K–$20K per client
- -24/7 monitoring requirements — need on-call technicians or night shift coverage
- -Continuous training needed for new security threats and OS updates
- -Price pressure from national MSP chains and remote-first competitors
- -Complex tech stack requires depth — not suitable for solo operators
Best For
Experienced IT professionals with business development skills; founders who can build team and systems
Operating Costs
Major costs: technician salaries ($60K–$100K+), remote management/monitoring tools ($500–$2,000/month), liability insurance, continuing education. Scales efficiently — cost per client decreases as you grow. Customer acquisition (sales, marketing) is significant upfront but amortizes across client lifetime.
Where to Buy
Find managed IT services and MSP businesses for acquisition
Specialist broker for MSP and managed services acquisitions
IT managed services companies for sale with financial data
Quick Facts
- Category
- service
- Difficulty
- 3/5
- Acquisition Price
- $2.0M - $4.0M
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Managed IT Services (MSP)
$800K/yr • 32% margins • 2.5x–5x multiple
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