Selling your MSP? Contracted MRR is the only number buyers really price.
Managed service providers trade on the quality of monthly recurring revenue — and the Australian MSP consolidation wave gives well-run books genuine buyer competition.
Australian MSPs typically sell for 3.0 to 5.0 times normalised EBITDA — above the trades and most services — because contracted monthly recurring revenue is the closest thing in the SME market to software economics. Books with 70%+ contracted MRR, security-weighted service mixes and demonstrably low churn reach 6 times; project-and-support shops without contracts price like labour hire.
To 6.0× at the premium end: contracted per-seat MRR above 70% of revenue, security services mix, sub-2% monthly churn.
Indicative market observation, not a valuation of your business. Where your business sits in — or beyond — the band is exactly what a valuation establishes.
What buyers pay a premium for
- ·Contracted per-seat or per-device MRR as a percentage of total revenue — the headline metric in every MSP deal
- ·Security services mix: managed detection, backup and compliance services raise both margin and stickiness
- ·Multi-year agreements with genuine termination clauses, not month-to-month arrangements dressed up
- ·Documented, tool-driven service delivery (RMM, PSA, runbooks) that survives technician turnover
- ·Client cohort retention — buyers will compute revenue churn from your ledger, so know it first
What quietly kills MSP deals
Owner-as-chief-engineer is the classic: if the seller is the escalation point for the top ten clients, the buyer prices key-person risk into an earn-out you may not enjoy. Fake MRR is second — support retainers that clients treat as cancellable-anytime get reclassified in diligence, repricing the deal downward late. Third, client concentration: one client over 20% of MRR moves price into contingent structures.
Who is buying MSPs
Australia is mid-consolidation: PE-backed MSP aggregators building national platforms, telco and cloud channel players buying capability and contracts, and larger MSPs acquiring for geography or vertical depth. Buyer depth is genuinely strong above roughly $500K EBITDA with real MRR — MSPs are one of the few SME categories where a competitive process is realistic at modest scale.
When to start
The metrics buyers price — MRR percentage, churn, contract terms — are all improvable within 18 to 24 months of deliberate work: converting time-and-materials clients to agreements, attaching security services, documenting delivery. Baseline the valuation now, fix the two weakest metrics, and the same business sells for a materially different number.
Common questions.
Is revenue from product resale worth anything?+
Hardware and licence resale is priced near zero margin-for-margin — it is pass-through. Its value is the attach: buyers care about resale only as evidence you control the client's stack. Do not let a big resale line inflate your revenue expectations.
What churn number do buyers want to see?+
Under roughly 2% monthly revenue churn reads as healthy; near-zero logo churn among contracted clients is the premium story. Above that, buyers assume the MRR is softer than the contracts claim and price accordingly.
Do I need audited financials to sell?+
Not audited, but reconcilable: your PSA, your ledger and your bank statements must tell the same MRR story. MSP diligence is unusually data-driven, and inconsistencies cost more than they would in any trade sale.
Where does your business sit in the band?
Five minutes, free, and private. An instant indicative range from your figures, with a human read-through to follow.
What is my business worth?Talk to a valuer
Tell us what you need valued.
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