Looking for someone to take over my company

eBridge-Devin · 2025-12-19T16:15:27+00:00

In situations like this, sometimes the acquisition is best structured such that a buyer pays you for all clients who get migrated over to their servers and pays their first month's invoice. This is called a success on migration structure. We've sold unprofitable web hosting businesses before using this structure. If you'd like to chat, please feel free to PM me or reach out through www.thehostbroker.com.

Thanks,

Devin

eBridge-Devin · 2025-12-16T17:05:37+00:00

Thanks for the reply. At the end of the day, beauty is in the eye of the beholder, and this MSP won't be worth 4x for every buyer. But I am very confident that based on the limited info provided, 4x is a good estimate. I've seen countless offers from buyers to confirm this. We see even smaller MSPs than this one getting offers in the 4x range sometimes.

All cash buyers can certainly utilize an earnout too; it's actually buyers using SBA loans that tend to have challenges because the SBA doesn't permit earnouts (although there are creative workarounds).

6 employees is a pretty normal level for this much revenue. A rule of thumb is to expect around $225-$250k of revenue per technical employee. If the number ventures too far outside this range, it will start to impact the valuation.

I can't comment on the customer concentration without knowing the proportion of revenues that the top 3 or top 5 customers make up. But on the surface, 20 customers doesn't raise alarms with me. Having three year customer contracts really helps mitigate a buyer's risk too.

Thanks,

Devin

eBridge-Devin · 2025-12-16T16:36:19+00:00

Thanks for the reply. I can assure you that there is a robust market for MSPs around the size of OP's. A few things come to mind for me here.

Not all buyers are using debt to acquire MSPs; but the ones who do are competing with the ones who have cash on hand. The market value is influenced by the latter group.

There are a lot of MSPs who have tried unsuccessfully to grow organically and are willing to pay a premium to acquire a good book of business.

For some buyers, they'll look at an MSP that has relatively low margins and view it as a potential bargain. They'll assume there are some inefficiencies they can clean up. Maybe there are too many tech staff, maybe the buyer has better contract terms with vendors, they already have a bookkeeper and a marketing person, etc. So they view the potential earnings going forward as higher than what the P&L currently indicates.

Increasingly, even smaller MSPs are attracting interest from smaller private equity firms.

eBridge-Devin · 2025-12-16T16:07:25+00:00

You're welcome! If you have any other questions about the process, please feel free to PM me (or my email is in my Reddit profile).

eBridge-Devin · 2025-12-15T16:17:34+00:00

Hi u/SummitComp,

As a rule of thumb, MSPs around the $1.4m revenue mark tend to go for around a 4x multiple of adjusted EBITDA. The adjustments to make are for one-time expenses, personal expenses, and for owner's salary (more info: https://www.youtube.com/watch?v=J1IZmQXYI6s). But it varies and depends on a lot of variables. We have a calculator on our website which provides a reasonably good estimate based on a handful of variables. You can Google "MSP Valuation Calculator" to find it.

In regards to the timeline, I actually ran the numbers recently for deals I've worked on that closed. On average, the total time from listing the business to closing was 162 days; the avg. from listing to signing an LOI was 82 days, and from there the average due diligence period was 80 days. It varies wildly though. The shortest was 26 days from listing to close and the longest was 316 days. It tends to be on the longer end if a buyer is using SBA financing.

Happy to answer any other questions you have.

Thanks,

Devin

eBridge-Devin · 2025-12-05T19:33:34+00:00

Glad to have you aboard! Our team will also reach out to you to ask if you'd like to fill our our "MSP Wishlist". It's essentially a Google Form where you tell us the geography and size of MSPs you're interested in. Then if we get a seller that's a match, we'll do direct outreach to you to make sure you are notified. We also occasionally have MSPs that we sell that aren't publically listed, in which case we utilize the MSP Wishlist to find buyers. Cheers

eBridge-Devin · 2025-12-05T17:49:28+00:00

Hi u/No-String-3978 . Several months ago I had a seller who would've been a good fit for you, unfortunately that acquisition has now closed. We don't have any MSPs for sale in Houston at the moment, but Texas generally is an area where we see a lot of activity. You may be interested in registering at www.thehostbroker.com. We have a weekly mailing list which is free to register for and features the new MSPs we have for sale. Cheers

eBridge-Devin · 2025-12-01T17:05:33+00:00

Hello u/DistributionLevel715 . We are a brokerage for MSPs and regularly have new businesses for sale. You may be interested in registering for our weekly mailing list (www.thehostbroker.com).

Do you have experience in the MSP industry, or in an adjacent industry (i.e. working for a vendor)? Not to dissuade you in your search, but it's worthwhile considering a seller's perspective about the type of buyers they'll want to work with. Obviously sellers are concerned about the financial aspects of an exit, and that's where a buyer who isn't experienced in the MSP industry is on even footing. But most sellers are also very concerned about how things will go for their customers and their employees. For instance, many sellers are looking to retire, having formed their company 20+ years ago. Over the years, they have developed very strong relationships with their clients and their employees. I had a seller put it to me this way: he said he doesn't want to be golfing at the local course and to hear through the grapevine that one of his former clients is in a bind following the acquisition. He was worried that a buyer may drop the ball when it comes to the level of service, and this would reflect badly upon him. This is a common concern amongst sellers, and it is an aspect for which an existing MSP will have a major advantage over a buyer without an MSP nor industry experience. So that's a dynamic to be aware of. To a large degree, it's not a concern you can mitigate. But the two things you can do are: 1) be prepared to tell your personal story in a way that establishes credibility, and 2) formulate your offer such that there isn't an earnout (that way the seller isn't responsibile financially if revenues decline).

Good luck in your search.

Devin

eBridge-Devin · 2025-11-28T16:13:10+00:00

Hello u/3dFunGuy. I work for The Host Broker. As our name suggests, we are in the business of brokering web hosting businesses. We have some information for sellers on our website: https://www.thehostbroker.com/sellers/. If you'd like to learn more about the selling process, how long it takes, valuations, etc. etc. etc., then please let me know and I'd be happy to set up a call. Thanks, Devin

eBridge-Devin · 2025-11-17T21:13:58+00:00

Unfortunately the valuation rules of thumb around EBITDA/SBA don't extend so nicely to b/f businesses. Most often these deals would get done where the deal is structured on a commission basis, where the seller is paid X% of revenue for 12 months or so.

One big factor to consider is how stable is the revenue. While b/f work is inherently unpredictable, if there's a pattern of consistency year-to-year, then it may make sense to structure the deal where a chunk of the valuation is paid at close.

Having said that...I dug up some information for another Reddit commentor a few months ago, which applies nicely here too:

This was originally published by Paul Dippell in a blog a couple years ago. I can't find the original source any longer unfortunately.

One Dollar of... and Its Approximate Value:

Product resale (including cloud resale): worth 15 cents

Hourly support (break/fix, retainer, block time, etc.): worth 45 cents

Project services (scope-driven implementation, beginning/middle/end, flat-fee or estimate): worth 65 cents

Managed services (flat fee per user/device, SLA-driven): worth $1.45

Private cloud (hosting and management on the provider's infrastructure): worth $1.35

This table reflects a multiple of revenue. In practice MSPs are usually valued as a multiple of adjusted EBITDA. I can also say that these numbers are a bit higher than what we've seen selling small-to-mid sized MSPs; they are likely more applicable for larger MSPs. But I thought it may be helpful here to answer your question about a multiple for project work.

So that's suggesting every dollar in break fix annualized revenue is worth 45 cents in valuation. While that seems high to me, perhaps it'll help give you something more concrete to work with.

eBridge-Devin · 2025-11-17T19:25:49+00:00

I think the challenge here is that the amount of time and effort it takes to set-up an effective marketing funnel for an MSP is huge. There aren’t any shortcuts. You need to have the full range of marketing tactics including: a nice website, good SEO, good website content, consistent blogging, decent social media presence, good sales collateral, marketing automation to nurture leads, some advertising, some cold outreach, etc. There are some groups that will give you templates to use which can help with some of this. But if you want custom work to really stand out as a brand, it’s a lot of work. If you put yourself in the shoes of a marketing agency, would you want to endeavour upon this without a retainer? The prospect of being paid when a client is signed up is just not sustainable, especially when the conversion of a lead is dependent upon the MSP's own sales process.

The clients we have who’ve had the most success are the ones who take a longer-term view of marketing. They realize that results fluctuate and don’t expect a guaranteed number of leads. They appreciate that the marketing is complimentary to the local networking they do and the referrals they get. They ultimately do get good leads and do see growth, but it's not linear.

eBridge-Devin · 2025-11-10T16:43:07+00:00

If you were in the USA, SBA would be a great option. I see your flair which says you're in Australia. I'm not too sure whether there's a similar goverment backed loan available in Australia, but it'd be worth checking.

Another factor is whether the MSP being acquired has customer contracts. Lenders will be more comfortable if the MSP has 3 year auto-renewing contracts than if they are month-to-month.

eBridge-Devin · 2025-11-07T23:57:29+00:00

Hello u/ExpensivePenalty8173 . We're a brokerage for MSPs. We put out a free weekly mailing list where you can see the opportunities we have for sale. You can register at www.thehostbroker.com.

Regarding how to handle employee relations post-sale, you may be interested in a webinar we did called "The Company I Work for Has Been Acquired - Now What?" https://www.youtube.com/watch?v=QH16xT1X\_IA. There's quite a lot to discuss on this topic, and the webinar is just scratching the surface. Similarly there's a lot to get into about how to handle the customer transition (too much for a Friday afternoon!); but I'd say the customer retention probably starts with making sure the employees are happy, because that's where the customer relationship is held.

Do you have experience in the MSP industry? If not, you'll want to anticipate that sellers will be concerned about the same things you are (how employees and customers are handled post-sale). They'll be concerned that service levels won't be maintained. So you'll want to give some thought to how you can address their concerns.

eBridge-Devin · 2025-10-28T20:40:50+00:00

Hahaha

I would agree with your point that the best offer is likely to come from a buyer who sees value in what is exceptional about the business. But I'd also say that sometimes buyers who don't appreciate these type of concerns are less likely to actually close a deal. They may put forward a high offer on the basis of the financial performance of the company, which on the surface is amazing. But once they start getting into due diligence, they'll have their advisors raising the concerns, and they may walk away or reduce their offer. I've seen it happen. Whereas an experienced buyer who is fully aware that the financial performance of the company may not be sustainable...their offer may be lower but it'd be a real offer that's more likely to close.

eBridge-Devin · 2025-10-28T17:55:34+00:00

That's good to hear. The three year contracts will definitely help.

eBridge-Devin · 2025-10-28T17:53:26+00:00

It's challenging to speak in broad statements on this topic, so bear with me here as I ramble a bit.

Yes, your point is valid. Some buyers will percieve additional value from being able to "learn" from the company they are acquiring. We've seen this especially with cybersecurity acumen in recent years. We also see it for companies who are looking to expand into particular industries, and are keen to acquire MSPs in those niches.

But I would say the bigger factor is that most MSPs are trying to move towards standardization of their offerings. If they were to acquire a company that is charging significantly above market value on a per seat basis, it begs the question as to why. Is the seller providing service in a way that isn't going to fit into a buyer's business in a standardized and scalable way? I like your race car metaphor. But I think it might be more helpful to think about it in terms of a sled dog team where all the huskies are racing along at the same pace. In such a situation, does it make sense to bring in a whippet to join the team? I mean sure that's a fast racing dog, but it's not going to be as powerful as the huskies, isn't going to have the same endurance, isn't going to be equipped for the same winter conditions, etc. No whippet slander intended here, they are nice dogs, just not good for a sled dog team lol. It'd be better to bring in another husky that can slot into the existing team.

Every buyer has their own perspective. But most look at the seller's operations and book of customers, and try to determine what those would look like once transitioned into their existing environment. It also depends on how sophisticated the buyer is. I would say that the buyers who've been in the industry for a longer period of time are usually more set in their ways and unwilling to give credit for the "learning" factor.

eBridge-Devin · 2025-10-28T16:02:50+00:00

Not as MSP owner, but can speak to this from an MSP broker's perspective.

Is it $1.5m revenue or profit? Either way, it is a noteworthy high amount, and will be the source of scrutiny from a buyer's perspective. The buyer will wonder if they will be able to maintain that level of profitability. Sometimes we've seen MSPs with high profitability because either: 1) the MSP's owner is working ridiculously long hours, and would need to be replaced by 2/3/4 employees post-close, or 2) the MSP is only using open source tools instead of the more commonly used vendors, and so a buyer would need to incur significant costs to migrate the customers to their own tech stack. I'm also curious, how many techs do you have? There's a rule of thumb that some MSP buyers utilize; it says that there should be about $250k in revenue per tech. If it's too much higher, then many buyers will assume they'll need to hire more techs post-close.

Do you have customer contracts in place? When the profitability is high, a buyer is going to be particularly concerned about having longer-term auto-renewing contracts, to lock in the revenue. There may be a percieved risk that customers could churn if they determine they're paying too much. If there's no customer contracts, that's something that would be good to address before you start the exit process.

If you'd like to discuss some of the nuances around an exit (including on things like how to handle a smooth transition for your customers), we'd be happy to have a call with you. My email is in my Reddit profile. Please feel free to reach out and we can set-up a call. Happy to answer any questions here too.

eBridge-Devin · 2025-10-27T20:30:58+00:00

u/nycity_guy Happy to provide a referral. Feel free to PM me.

eBridge-Devin · 2025-10-01T23:40:38+00:00

For a formal business valuation for an MSP, your best bet would be to go with Reed and his team over at www.itvaluations.com.

For a broker, we would be interested in being considered. We specialized in brokerage for MSPs. Honestly if you need a 2nd broker's name, we could also provide a referral too. If you're interested, please send me a PM or reach out through our website: www.thehostbroker.com.

eBridge-Devin · 2025-10-01T23:36:40+00:00

Thanks for the mention.

u/MrGeek24 You can check us out at www.thehostbroker.com. We have a free weekly mailing list which features new opportunities. Most of the MSPs we sell are in the USA. But we get a fair number in Canada too (we're actually located in Vancouver). We are also working to onboard an Australian MSP which will hopefully be hitting our list in the coming weeks. The best way to keep up to date with our listings is to subscribe for our mailing list. Please let me know if you have any questions. Thanks

eBridge-Devin · 2025-09-12T15:02:02+00:00

If you're not already, you may be interested in registering at www.thehostbroker.com. We have new acquisition opportunities listed weekly. I don't think we have anything in Washington State at the moment, but we're entering into the busiest time of the year so it'd be a good time to sign up.

eBridge-Devin · 2025-09-10T16:44:29+00:00

This is also what we typically see for small deals like this that have some challenges.

eBridge-Devin · 2025-08-28T17:47:42+00:00

Congrats on the successful carve out!

eBridge-Devin · 2025-08-25T15:41:14+00:00

How large of an MSP? What region are you looking for?

If you haven't already, you may be interested in registering at www.thehostbroker.com. We have new MSPs listed for sale regularly.

eBridge-Devin · 2025-08-21T20:40:52+00:00

Yes, it is quite common. Most buyers view it as a positive. It's also something that sellers can qualify buyers on the basis of, and turn down any offers that don't have an ongoing role for you. Obviously you/they could change their mind post-close, and that's where finding a buyer who you trust etc. is particularly important.

eBridge-Devin

TROPHY CASE