The MSPs that close at the top of the valuation range aren't the ones that got lucky with timing. They're the ones that spent 12 to 18 months getting ready before a single buyer saw their financials. The difference between a prepared seller and a reactive one is routinely 2–3x turns of EBITDA on the final number.
By Gui Carlos, CFA — Principal at Walden Mergers & Acquisitions
Last updated: February 2026
Why does preparation matter so much?
Because buyers price uncertainty. Every question they can't answer from your data room becomes a discount. Every gap in documentation becomes a reason to re-trade you on price.
If your books are clean and your operations are documented, diligence takes 45–75 days and the deal closes at or near the agreed price. If your books are messy and half your institutional knowledge lives in one engineer's head, diligence stretches past six months, the buyer finds problems, and the price moves down.
Months 12–10: Financial cleanup
Move to accrual-based accounting. Cash-basis books are a red flag for any sophisticated buyer. Make the switch now so you have clean accrual financials for at least the trailing twelve months before going to market.
Normalize your EBITDA. Add back owner comp above market rate, one-time costs, and personal expenses through the P&L. But don't add back costs a buyer will need to replace. Your normalized EBITDA is the number buyers will multiply. Getting it wrong costs you money.
Separate revenue streams in your PSA. Managed services MRR, security MRR, project revenue, and hardware resale should each be independently trackable in ConnectWise Manage, Autotask, or HaloPSA. Buyers value these at different multiples. Security MRR in particular carries a premium that disappears if it's not broken out.
Commission a sell-side QoE. For MSPs with $2M+ EBITDA, a sell-side Quality of Earnings report is the single highest-ROI pre-sale investment. It identifies fixable issues before a buyer's accounting firm finds them, speeds up diligence, and reduces re-trade risk.
Months 10–7: Fix concentration and churn
Map your customer concentration. If any single client is above 15–20% of revenue, grow other accounts aggressively through new acquisition or cross-selling security and compliance to existing clients. Every quarter you let one client sit above 20% is a quarter you're discounting your own exit.
Measure and document churn. Gross revenue retention above 90% is the benchmark. Net revenue retention above 105% puts you in a different conversation. If you're not tracking GRR and NRR monthly, start now. If churn is high, seven months gives you time to fix root causes and show an improving trend.
Lock in contracts. Month-to-month agreements are a liability in M&A. Push for 24–36 month terms with auto-renewal. Moving your weighted average contract length from 12 months to 24+ can add 10–20% to your valuation.
Months 7–4: Build the business that runs without you
PE firms pay platform multiples for businesses that operate without the owner in the room.
Document your operations. Onboarding, offboarding, escalation procedures, NOC workflows, incident response, QBR templates, sales processes. If your senior techs carry all the institutional knowledge and none of it is written down, a buyer sees risk.
Build your second layer of leadership. At minimum: a service delivery manager and a sales or account management lead who can run their functions independently. PE buyers want a management team, not a sole proprietor with employees.
Step back from client relationships. If your top 10 clients only talk to you, start introducing them to your team now. Buyers need to see that relationships survive the founder's transition. This takes months, not weeks.
Clean up your tech stack. Standardize on one RMM, one PSA, one documentation platform. Mixed stacks from legacy acquisitions create diligence headaches and signal operational debt.
Months 4–1: Prepare for the process
Assemble your deal team. An M&A advisor who knows the MSP market, a transaction attorney (not your general business lawyer), and a CPA who understands deal tax structuring. The advisor creates competitive tension. The attorney reviews the LOI, purchase agreement, and rollover terms. The CPA models after-tax proceeds under different structures.
Build your data room. Three years of financials, tax returns, QoE report, client contracts, employee census, org chart, PSA reports showing MRR trends, churn metrics, and a management presentation. Organized data rooms speed up timelines. Disorganized ones make buyers nervous.
Prepare your growth story. Buyers are purchasing a future, not just trailing EBITDA. What verticals can you expand into? What security or compliance services can you add? What geographies are adjacent? Back it with data, not just optimism.
Decide what you want beyond the money. Do you want to stay two years or five? Do you care about your brand surviving? Are you willing to take rollover equity? Knowing your priorities before the first LOI arrives keeps you from making reactive decisions under pressure.
Common mistakes in the last 90 days
Telling employees too early. Key technical staff leaving during diligence is a deal-killer. Keep the circle tight until you have a communication plan ready.
Neglecting the business. Revenue dipping during diligence gives the buyer ammunition to re-trade. Maintain your pipeline, hit QBRs, keep closing new clients.
Falling in love with one buyer. Competitive tension is your best friend. Keep at least two serious buyers in play through LOI. The buyer who knows they're competing puts their best number forward.
Ignoring tax planning. Asset sale vs. stock sale, QSBS exclusions, installment treatment, state tax implications. The difference between a well-structured and poorly structured deal can be 10–20% of your after-tax proceeds. Engage your CPA early enough to influence structure, not just file the return.
If you're thinking about selling in the next 12 to 24 months and want to know where you stand on this checklist, I'm happy to walk through it. No cost, no obligation. You can reach me through guicarlos.com or connect on LinkedIn.
Gui Carlos, CFA, is a Principal at Walden Mergers & Acquisitions, a trusted Atlanta-based M&A firm since 1991. He focuses exclusively on MSP and MSSP transactions.
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