How might MSP and MSSP valuations shift as we march toward 2023? Abe Garver of Focus Investment Banking and Ramsey Sahyoun of Evergreen Services Group will provide perspectives during MSSP Alert Live 2022 (join us September 19-21, Washington, D.C.).
Indeed, the duo is confirmed to speak on an MSSP Alert Live panel titled State of MSSP M&A: Business Drivers, Valuations & Considerations, which is scheduled for September 21.
MSP and MSSP Valuations vs. SaaS Companies: The Background
The good news as of July 2022: MSP and MSSP valuations have held up well -- despite plummeting SaaS company valuations on Wall Street. Why's that?
- Generally speaking, MSPs and MSSPs have always been valued based on their EBITDA (earnings before interest, taxes, depreciation and amortization). Sure, there are additional valuation metrics. But M&A in the MSP market has largely been a profit-based conversation for more than a decade.
- Meanwhile, SaaS companies until recently were largely valued based on their annual recurring revenue (ARR) -- and many SaaS investors ignored bottom-line profits.
The big inflection point: When investors in Q1 2022 began to shift their focus from revenue-growth to profit-growth, MSPs and MSSPs were very well positioned for that M&A conversation. Even ahead of that shift, dozens of private equity firms were active buyers and investors in the MSP/MSSP sector. (Related: See more than 1,000 MSP M&A deals -- the buyers, sellers and investors -- listed here.)
MSP and MSSP Valuations: Meet the Experts
So where Garver and Sahyoun enter the picture?
- Garver is managing director and MSP team leader at Focus Investment Banking, During his career, Garver has worked on sell side, buy side and capital raise assignments with approximately 75 clients including public, private, Inc. 500 fastest growing and Top 50 MSP companies.
- Meanwhile, Sahyoun is head of M&A at Evergreen Services Group -- which has invested in and/or acquired more than 50 MSPs -- and most recently, MSSPs. Ramsey spends his time talking to business owners and leading all of Evergreen’s new platform and add-on acquisitions.
Together, Garver and Sahyoun are uniquely qualified to describe current MSP and MSSP valuations -- and the variables that influence those valuations. Moreover, they can describe the potential implications -- if any -- for valuations as MSPs and MSSPs navigate economic headwinds like inflation and rising interest rates.
Join us for their panel at MSSP Alert Live 2022 in September. And if you have questions for Garver or Sahyoun that you'd like raised during the panel, please email MSSP Alert Editorial Director Joe Panettieri.
