Episode #785 of the MSPi PrimeCast
The managed services industry continues to see strong merger and acquisition activity. While many MSP owners assume revenue size is the primary driver of valuation, Rick Murphy of Cogent Growth Partners explained that buyers often evaluate deeper operational characteristics before making a decision.
Murphy has worked on hundreds of transactions involving technology service providers and has seen firsthand how buyers analyze MSP businesses. His perspective highlights that the most valuable companies often share several structural and operational qualities that reduce risk and demonstrate long-term sustainability.
For MSP owners, understanding these signals can help strengthen their business whether or not they are planning to sell.
Below are several factors Murphy discussed that buyers frequently evaluate.
1. Operate the Business as if a Transaction Could Happen Anytime
Murphy emphasized that MSP owners benefit from running their companies as if a potential buyer might review the business tomorrow.
This mindset encourages stronger operational discipline, clearer financial reporting, and well-organized documentation. Even when an exit is not immediately planned, operating with this level of readiness often produces a stronger organization.
MSP Action:
Maintain accurate financial reporting, documented processes, and structured operational metrics so the business can withstand outside scrutiny.
2. Reduce Founder Dependence
Buyers often analyze how dependent the organization is on its founder. When every key decision, relationship, or process flows through the owner, it increases risk for a buyer.
Murphy explained that companies with distributed leadership and operational independence tend to attract stronger acquisition interest.
MSP Action:
Delegate leadership responsibilities across the organization so the company can operate effectively without daily founder involvement.
3. Build a Leadership Structure That Supports Growth
Beyond reducing founder dependence, buyers want to see that an MSP has a leadership structure capable of guiding the company through future growth.
Defined leadership roles and operational accountability help demonstrate stability and maturity within the organization.
MSP Action:
Create clear leadership roles across service delivery, technical operations, and client management.
4. Develop Strong Technical Talent
Murphy noted that talent often plays a significant role in acquisition decisions. In many cases, buyers are acquiring not just customers or revenue, but the people delivering the services.
Experienced engineers, technicians, and operational staff help ensure continuity after a transaction.
MSP Action:
Invest in recruiting, developing, and retaining skilled technical staff who are capable of supporting customer environments long term.
5. Ensure Customer Relationships Extend Beyond the Owner
Customer relationships are central to any MSP business, but Murphy highlighted that relationships tied exclusively to the founder can create challenges during an acquisition.
Buyers prefer organizations where relationships are supported by teams and structured service models.
MSP Action:
Introduce account management and client success processes so multiple team members maintain relationships with customers.
6. Build Repeatable Service Delivery Processes
Operational consistency can significantly influence buyer confidence. Companies with documented procedures and repeatable systems demonstrate operational maturity and scalability.
Murphy explained that buyers often look for evidence that services can continue smoothly after ownership changes.
MSP Action:
Document service delivery workflows, onboarding procedures, escalation processes, and internal operational standards.
7. Focus on Long-Term Organizational Strength
Murphy’s broader message is that the qualities buyers value most are the same qualities that make an MSP stronger overall.
Companies with solid leadership teams, strong talent, clear operational processes, and transferable relationships are better positioned for both growth and acquisition opportunities.
MSP Action:
Build systems and leadership that allow the organization to operate successfully regardless of ownership structure.
What This Means for MSP Owners
The factors buyers evaluate are rarely based on short-term metrics alone. Instead, they often reflect the long-term structure and health of the business.
Operational discipline, leadership depth, strong teams, and transferable customer relationships all help signal that an MSP can continue operating successfully after a transition.
For many MSP owners, building these qualities not only increases potential acquisition value but also strengthens the company’s ability to grow and scale over time.
Catch the full conversation on MSPi PrimeCast Episode #785 and connect with Rick at https://www.linkedin.com/in/ramurph/
