The Australian Managed Service Provider (MSP) sector is experiencing unprecedented M&A activity. With strong recurring revenues, sticky customer relationships, and essential IT services, MSPs are highly sought-after by both local consolidators and international investors.
But in 2025, buyers are far more discerning. They’re no longer just purchasing revenue — they’re acquiring reliable cash flow, operational maturity, and scalable infrastructure.
So, what are the key things buyers look for when acquiring MSPs in Australia?
1. Recurring and Predictable Revenue
Revenue quality is everything. Buyers value MSPs with stable, contract-backed income, minimal project reliance, and low customer churn.
- Aim for 70%+ recurring revenue.
- Secure long-term contracts with renewal clauses.
- Maintain churn below 10%.
Predictability equals value — it’s that simple.
2. Operational Efficiency and Scalability
A well-run MSP commands a premium.
Buyers assess how efficiently your systems, tools, and processes deliver services.
- Mature platforms (ConnectWise, Autotask, HaloPSA).
- Documented SOPs and automation.
- Robust cybersecurity frameworks (MFA, SOC, ISO 27001).
The more automated and standardised your operations, the higher your valuation multiple.
3. Strong Leadership and Retention
Talent retention is mission-critical.
Buyers prefer MSPs with experienced management teams and minimal reliance on founders. Retaining key staff through earn-outs or bonuses builds confidence in post-acquisition stability.
A great culture translates into smoother integration and better client retention.
4. Client Diversity and Reputation
Customer concentration is a red flag.
Aim for a broad client base across industries, geographies, and service tiers.
Buyers love MSPs with vertical expertise — particularly in sectors like healthcare, finance, and professional services — where compliance and trust are paramount.
Client satisfaction data (NPS, CSAT) can further strengthen buyer confidence.
5. Compliance, Contracts and Cybersecurity
In today’s environment, risk management is non-negotiable.
Buyers conduct deep diligence on:
- Contract assignability and change-of-control clauses.
- Data privacy and cyber resilience.
- HR and payroll compliance under Australian law.
- IP ownership and licensing rights.
Clean, well-structured documentation can make or break a deal.
6. Strategic Fit and Growth Opportunity
Every acquisition needs strategic logic.
Buyers ask: “Does this MSP expand our footprint, deepen expertise, or enhance client coverage?”
MSPs that can integrate easily — technically and culturally — attract the strongest offers.
7. Valuation and Deal Structures
Australian MSPs typically trade between 3 to 7 times EBITDA, depending on:
- Recurring revenue ratio
- Cybersecurity maturity
- Scale and growth potential
Earn-outs, deferred payments, and R&W insurance are increasingly common in 2025 deal structures.
Conclusion: How to Maximise Your MSP’s Value
For owners considering an exit, preparation is key.
A business that demonstrates recurring revenue, cyber maturity, leadership depth, and process scalability will attract premium buyers.
At Magellan Business Sales, we specialise in helping Australian MSPs prepare for sale, manage due diligence, and achieve exceptional outcomes.
If you’d like to understand what your MSP could be worth — or how to position it for acquisition — we’d love to chat.
📞 Contact us today at magellanbusinesssales.com.au