May 2023

Market Update: Managed Services Providers Q1 2023

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Managed Services Providers (MSPs) will remain attractive investments as buyers enjoy the nature of longer-term contracts with proven MRR and a scalable land and expand model. The presence of “hybrid MSPs”, organizations that offer managed services alongside their other core services, increased from 2021 to 2022. This increase in presence is driven by the value added to an asset that enters the market with some form of managed IT services.

According to Globe Newswire, the global MSP market is expected to grow from $243.3 billion to $557.1 billion in 2028 – a CAGR of 12.6%. 7MA sees M&A activity remaining strong given the highly fragmented nature of the MSP space as sponsors and strategics look to increase scale and capture emerging technology market tailwinds to expand their geographic footprint.

There are several trends positively impacting the MSP landscape:

1. The continued shift from traditional on-prem servers to a cloud environment
2. Hybrid work models
3. Increased digital adoption complicating current infrastructure
4. Increased demand for omnichannel systems in customer experience
5. Low-code technology for employees and their selection

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 or Steve Buffington if you would like to learn more about MSPs.

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