Valuation Lab · Calculator
A managed-service provider is valued on adjusted EBITDA, and the multiple depends on how much of that EBITDA comes from contracted recurring revenue. This calculator forecasts managed-service MRR month by month from retention and new contracts, adds project and hardware revenue at their own margins, deducts delivery labour and operating costs once, and applies the 2026 IT services & MSP band for the resulting earnings size (4.5x-6.0x at $1M-$3M EBITDA; 5.5x-7.5x at $3M-$10M). A major-client-loss scenario removes that client’s revenue and the share of delivery cost that leaves with it.
Buyers of MSPs underwrite two numbers first: recurring share of revenue and gross margin on the managed contracts. Project work and hardware resale add revenue but little value, because they do not repeat and their margins are thin. The tool keeps the three streams separate so the recurring share is visible and cannot be inflated by pass-through hardware.
The client-loss control is there because concentration is the most common diligence finding in this sector. Set a client’s share of MRR and the share of delivery cost that disappears with it, and the tool shows the earnings and value with that client gone from month one.
The interactive calculator loads here. The published example scenario below is the same model (2026.09.22-1) evaluated at the example inputs.
Indicative enterprise value, EV / adjusted EBITDA (IT services & MSPs, $1M-$3M EBITDA): $6.1M. $5.2M to $6.9M at 4.5x to 6.0x; selected 5.3x
Year-1 revenue $4.3M, EBITDA $1.2M (26.9%), recurring share 77%. Band: Windsor Drake EBITDA multiples by industry, Aug 2026 (analyst ranges informed by GF Data Q1 2026, BizBuySell Q2 2026, NYU Stern Jan 2026). Aventis/Mergermarket median for MSP deals: 8.9x (n=120, median deal $38.5M); sub-$5M deals 5.2x implied.
Managed revenue (yr 1): $3.3M · Adjusted EBITDA: $1.2M · Recurring share: 77% · Equity value: $6.1M
| Line | Value |
|---|---|
| Managed-service revenue | $3.3M |
| Project revenue | $600K |
| Hardware revenue | $400K |
| Delivery labour | -$1.5M |
| Project and hardware costs | -$760K |
| Gross profit | $2.1M |
| Operating costs | -$900K |
| Adjusted EBITDA | $1.2M |
| Band | 4.5x to 6.0x ($1M-$3M EBITDA) |
| Enterprise value at selected multiple | $6.1M |
| Equity value | $6.1M |
Recurring managed revenue is modelled monthly with the annual retention rate converted to a monthly factor; project and hardware revenue are flat annual lines.
| Input | Value |
|---|---|
| Managed-service MRR | $250,000 |
| Annual contract retention | 92% |
| New contracted MRR per month | $6,000 |
| Project revenue (annual) | $600,000 |
| Hardware / resale revenue (annual) | $400,000 |
| Delivery labour (% of managed revenue) | 45% |
| Operating costs (annual, excl. delivery) | $900,000 |
| Model loss of a major client: its share of MRR | 0% |
| Project gross margin | 30% |
| Hardware gross margin | 15% |
| Owner compensation normalization (+) | $0 |
| Selected EBITDA multiple (0 = band midpoint) | 0x |
| Excess cash | $0 |
| Debt | $0 |
Recurring managed revenue above roughly 80% of the total, multi-year contracts with annual price escalators, delivery margin above 50%, a security stack that is sold rather than resold, and no client above 10% of MRR. Hardware-heavy providers, break-fix revenue and owner-dependent client relationships pull toward the bottom. Listed MSPs traded at a 12.4x median EV/EBITDA in 2025, but they are far larger and more diversified than the providers in the private deal data; the public proxy is a ceiling, not a benchmark.
Exploring what your company is worth? A principal will give you a confidential perspective on how the market is pricing businesses like yours: current multiples, the acquirers active in your sector, and where your company would likely land.
Disclosed transactions carry an 8.9x median EV/EBITDA across 120 deals with a median size of $38.5M, but the smallest deals cleared at 5x-6x and providers under about $1M-$2M of revenue trade at 3x-4x. Windsor Drake’s 2026 bands run 4.5x-6.0x at $1M-$3M EBITDA up to 7.0x-9.5x above $10M.
Because it is low-margin, non-recurring and often pass-through. The tool prices it at its own gross margin, so a large hardware line changes revenue far more than it changes EBITDA or value.
Set the client’s share of MRR and the share of delivery cost that leaves with it. The model removes both from month one, recomputes EBITDA and re-selects the band if the earnings size changes.
Only as a sanity check. Listed MSPs trade at 1.1x-1.3x revenue and private deals are priced on EBITDA; a revenue multiple hides the margin difference between managed contracts and hardware.
Enterprise value is quoted cash-free and debt-free; equity value adds excess cash and subtracts debt and debt-like items, before fees, taxes, escrow, rollover and earn-outs. Every method states its denominator, period (trailing twelve months unless labelled), currency (USD) and treatment of cash and debt. Results are ranges under stated assumptions, not statistical confidence intervals. Company inputs stay in the browser and are never transmitted. Benchmark snapshot 2026.09.22-1; model 2026.09.22-1; changes are recorded in the Valuation Lab changelog in the Windsor Drake repository.
Benchmark: MSP valuation multiples · Related: IT services valuation calculator · Cybersecurity valuation calculator (MSSP mode) · Business valuation calculator · All valuation tools