The managed service provider (MSP) mergers and acquisitions (M&A) market remains a robust pocket of activity amongst a broader, macro slowdown in M&A. Despite significant consolidation over the past decade, the MSP market remains fragmented and competitive with many different MSPs providing overlapping services in a crowded landscape. That said, the breadth of managed services has expanded, ranging from help desk to advanced cybersecurity and cloud management, making differentiation more pivotal. Best-in-class MSPs are distinguishing themselves by building deep capabilities in core areas such as cloud, automation, and cybersecurity, denoting a shift away from generalist information technology (IT) support to specialized, strategic service delivery.

MSP market growth should continue to accelerate as the shift to a hybrid workforce proliferates along with cloud adoption, increasing IT complexity, evolving cybersecurity threats and the rise of artificial intelligence (AI).

In a crowded and competitive market, MSPs must show clear differentiation through vertical focus, strong client ties, strong wallet share, and recurring revenue to attract capital partners.

Cybersecurity is an extremely high value segment of the MSP space as evidenced by its high public market valuation and high revenue growth. Cloud Platform services are another high growth segment of the managed services space, but these companies tend to be larger, more diversified entities that derive material revenue from sectors outside managed services.

For more information, please contact: Jeff Goodman or Abhishek Pathania.

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