The MSP M&A Market View for 2023



January 31, 2023

The Managed Services Provider (MSP) market continues to offer acquisition opportunities to growth-focused buyers seeking non-organic growth.


The MSP market remains largely fragmented but as acquisitions have been increasing here YOY, there are going to be fewer top tier MSP companies for acquirers to pursue.


Shareholders should recognize that timing to consider being acquired will be impacted by the wave of activity we continue to see in their market. Over 70% of companies surveyed reported they will either maintain their current acquisition level (25%) or are forecasting an increase in the number of acquisitions they will do this year (46%).


Given this forecast in acquisition activity and the sheer volume of cash available on corporate balance sheets and in private equity firms, shareholders should consider whether this favorable market timing coincides with their personal objectives to de-risk and achieve a liquidity event with the added upside of accelerated growth from an increase in available resources.


When M&A activity is strong, founders will be approached by various buyer types interested in talking about acquisition. We caution founders that the best outcome generally happens when:

·      Companies are well-prepared (all financials and legal and operational items are up to date)

·      There are multiple good-quality buyers at the table submitting competitive offers


This is the best way to be confident that the best outcome was reached: quality of buyer, valuation, and quality of offer (i.e., % of cash at close + any additional structure). Sellers also understand whether the initial offer they may have received was at the top, in the middle, or at the bottom of the market.


Read our forecast on M&A in the MSP market HERE


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