A valuation is not a number a broker gives you; it is a model you build from the drivers buyers actually pay for. The MSP Valuation Framework gives owners a repeatable way to estimate a range and to see which levers will move it.
Adjusted EBITDA
Start with net profit and add back owner-specific costs, one-off expenses and discretionary spending. Be honest: buyers will reverse anything that cannot be separated from the business. The resulting adjusted EBITDA is the base on which the multiple is applied.
Recurring revenue weight
Not all revenue is equal. Recurring revenue under contract gets a higher quality weight than project revenue or time-and-materials work. Calculate the proportion of revenue that is contracted recurring and consider how to shift project clients onto recurring agreements before a sale.
Client concentration
Concentration reduces the multiple. If one client is larger than a level the buyer considers material of recurring revenue, the buyer prices in the risk of losing them. Diversification is usually the highest-return improvement an owner can make.
Transferability score
A business that depends on the owner is harder to sell. Score transferability across process documentation, leadership team depth, vendor relationships and client-facing roles. Each improvement should increase the multiple by making the handover safer.
Note
Multiple ranges and thresholds are placeholders pending verified M&A data.
