Exit readiness means the business is prepared for a sale or partial exit before the owner starts talking to brokers. It covers financial accuracy, recurring revenue quality, client concentration, documentation and owner independence.
Exit readiness
Exit readiness is the condition in which an MSP can be presented to buyers with clean financials, transferable operations, diversified revenue and a defensible valuation model, typically built two to three years before a target sale.
- Also known as
- sale readiness, msp exit readiness
- Category
- strategy
- Source
- MSP Agenda editorial methodology
Why it matters to MSPs
Most value is lost in the last year before a sale, when owners try to fix problems they have ignored for years. Exit readiness spreads that work across two to three years, protects the multiple and gives the owner more negotiating power.
Related terms
- EBITDA multiple — An EBITDA multiple is a valuation ratio applied to a company's adjusted earnings to estimate its enterprise value; MSP multiples vary with recurring revenue quality, growth and client concentration.
- Client expansion — Client expansion is the practice of increasing monthly recurring revenue from existing MSP clients by adding services, moving them to a higher tier or selling outcomes tied to business priorities.
- Monthly recurring revenue — Monthly recurring revenue is the total predictable monthly income an MSP receives from active client contracts, excluding one-off project work and variable usage charges.