July 2022

Market Update: Managed Service Providers Q2 2022

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Managed Service Providers (MSPs) will remain attractive investments as buyers enjoy the nature of longer-term contracts with proven MRR. Coupled with the fact that MSPs have a customer-centric approach with a scalable land and expand model, 7MA sees M&A activity staying strong throughout 2022. Additionally,  given the highly fragmented nature of the MSP space, M&A activity will continue to be abundant as sponsors and strategics look to increase scale and capture emerging technology market tailwinds to expand their geographic footprint.

According to MarketsandMarkets Research, the MSP market is expected to grow from $242.9 billion to $354.8 billion in 2026, a 7.9% CAGR. Additionally, the MSSP (Managed Security Services Provider) market is expected to grow closer to 12-15% annually.

Second-quarter 2022 recorded 62 deals in the MSP market – a decrease from Q1 of this year. However, deal volumes and valuations remain high as:

1. Cloud adoption continues to grow – by 2023, 40% of all enterprise workloads will be employed in cloud infrastructure – Gartner
2. Companies implement advanced security measures to combat cyberterrorist
3. IT automation becomes the new normal in our data-driven society

7MA has completed numerous M&A transactions in the MSP space and has developed unparalleled deal expertise and knowledge of the industry trends, valuation trends, and most active strategic and financial buyers. Please contact Tim Frye, Steve Buffington, or Tanner Lange if you would like to learn more about MSPs.

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