Is Your Business ready for sale?
For many MSP owners, the decision to sell is driven by personal goals such as retirement, a new opportunity, or a desire to de-risk. But while the timing might feel right personally, the more important question is whether you are prepared.
Being “sale-ready” isn’t just about financial performance. It’s about how your MSP is positioned through the eyes of a buyer whether that is the strength of your recurring revenue, the quality of your contracts and reporting, and the degree to which the business can operate without you.
Whilst there is lots of appetite from a range of buyers seeking to acquire MSPs, here are five key areas that will impact on the initial valuation and the process itself:
Recurring Revenue and Margin Quality
The most valuable MSPs have a predictable, recurring revenue base with strong gross margins. Buyers want confidence that revenue is secure and supported by contractual relationships, not just goodwill.
Consider: What proportion of revenue is derived from recurring contracts versus ad hoc or project work? Are current pricing structures designed to deliver sustainable margins?
Clean, Transparent Financials
Well-presented financial information is essential. Buyers need to understand your revenue makeup, cost base, EBITDA and any adjustments that reflect the true underlying performance of the business. They will also look closely at your working capital cycle noting how quickly customers pay, how supplier terms are managed, and whether cash is tied up. Demonstrating efficient cash conversion reassures buyers and can have a direct impact on valuation and deal terms.
Consider: Are monthly management accounts produced on a consistent basis? Are margins tracked at the client or service-line level? Is there clear visibility over non-recurring or owner-related costs?
Customer Concentration and Contractual Strength
A diverse customer base reduces risk in the eyes of acquirers. If a small number of clients account for a significant proportion of revenue, that concentration could impact valuation or deal structure.
Consider: To what extent are key clients secured under long-term agreements with defined notice periods? Is revenue diversified across sectors and customer types?
Operational Independence
One of the biggest value drivers is whether the business can operate without day-to-day involvement from the owner. Buyers typically favour MSPs with a defined management structure and documented processes.
Consider: Is a defined leadership team in place? Are key responsibilities appropriately delegated? Can service quality be maintained independently of owner involvement?
Legal and Commercial Readiness
Buyers expect to see up-to-date, enforceable contracts for both clients and suppliers. This is not just about reducing risk; it’s also about demonstrating maturity and control.
Consider: Are service agreements documented with clear terms? Are licensing, support responsibilities, and notice periods explicitly defined? Are all contracts centralised and readily accessible?
Are you Ready for Sale?
Common Red Flags That Can Undermine Value
Even strong MSPs can be held back by issues such as:
- Over-reliance on the owner
- Incomplete or outdated contracts
- Inconsistent reporting or limited visibility on margins
- High levels of non-recurring or low-margin income
- Poorly defined internal processes
These risks do not necessarily prevent a sale, but they may affect valuation, extend timelines, or create challenges during diligence.
Preparing Early Pays Dividends
Even if a sale isn’t imminent, taking steps now to address potential issues will increase your options and help protect value later. A proactive approach gives you time to resolve gaps on your terms rather than under deal pressure.
At Knight Corporate Finance, we work with MSP owners to assess and improve sale readiness. Our structured reviews and bespoke Ready for Sale assessment provide clarity on what buyers are looking for and how your business measures up. Whether you are considering a sale in the near future or simply want to explore your options, we can help you prepare with confidence.
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