Regional MSP. $3.1M Revenue. Recurring Contracts. Under LOI.

The Snapshot

Why Managed Services, Why Now

MSP EBITDA multiples have compressed slightly off the 2022 peak, but recurring-revenue IT services businesses with net revenue retention above one hundred percent still price at a real premium to project-based IT shops. The buyer we are quarterbacking is a strategic — already running one MSP in an adjacent geography and buying for density, cross-sell, and a stronger engineering bench.

This is not a bolt-on for cost synergy. It is a platform decision. That framing matters because it changes what the buyer is willing to pay and what the seller believes about post-close intent.

How AIME Sourced The Target

AIME ran the seed list — three hundred and forty MSPs by geography, headcount band, and vertical mix. From that seed, we narrowed to fifty-two on recurring density and named-tool signal in job postings. We narrowed again to eleven on owner age and succession signal. Seven owners took a first call. Two moved to IOI. One moved to signed LOI.

• ◆Seed layer — SIC and NAICS pulls, refreshed weekly.
• ◆Enrichment layer — owner tenure, prior liquidity events, job post signal.
• ◆Prompt layer — three-touch personalized outreach, referencing the target's actual stack.
• ◆Handoff layer — every reply routed to a human within seventy-two hours.

"Cold M&A outreach fails when it reads like a template. AIME reads the target's website and their reviews before it writes the first line."

Why It Prices

• ◆Eighty-two percent recurring under signed multi-year MSAs — not month-to-month.
• ◆Net revenue retention above one hundred percent for three straight years.
• ◆Two lead engineers hold the top ten client relationships and both signed retention agreements at LOI.
• ◆The security stack is standardized. No snowflake tenants, no bespoke tooling per client.
• ◆Ticket volume per FTE is inside the top quartile of the MSP benchmark studies.

What The Quality Of Earnings Is Watching

Owner add-backs are the usual suspects — personal auto, health, a family member on payroll not in the ops chart. Real work is in the recurring-revenue definition. We are tightening MRR to strip out one-time hardware pass-through and Microsoft license margin, so the multiple lands on the true recurring service number, not the blended one.

That EBITDA delta is not a fight — it is a fair reading. The buyer priced off the QofE number from the start, and the seller was walked through it in a working session, not a legal letter. That is why the deal is still moving.

The Structure Under Negotiation

SBA 7(a) senior debt at seventy percent. Rolled seller equity at ten percent for two years. Buyer equity at ten percent cash. A ten percent earn-back tied to net revenue retention holding above ninety-five percent for eighteen months. The rolled equity is the alignment mechanism — the seller is out of the driver's seat but has skin in the platform's second act.

Where We Are

SBA package with the lender. Quality of earnings with a third-party accountant. Legal drafting the MIPA against the LOI. Target close inside seventy-five days of LOI signature. Next milestone is credit committee.