# The MSP Valuation Framework

The MSP Valuation Framework estimates a likely sale-price range by adjusting EBITDA for owner-specific costs, weighting recurring revenue quality, testing client concentration and scoring how transferable operations are to a new owner.

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.

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Source: https://mspagenda.com/guides/msp-valuation-framework
Last updated: 2026-09-11