Assume a client pays the model's $4,500 monthly fee and its agreement supports the model's 5% annual increase. The calculation is $4,500 × 5% = $225, then $4,500 + $225 = $4,725 a month. Before putting that amount into a sale forecast, check the change of control clause against the proposed deal and verify the price step was properly applied.
I'd assess contract quality through the revenue you can substantiate and the work you're committed to deliver. A documented annual step supports the future fee; a clear scope supports the cost estimate behind it. Unresolved rights to end or transfer the agreement belong beside the affected revenue, where a buyer can see the dependency.
Start With What Supports Continuing Revenue
My view is that a useful contract review explains why an income stream should continue, rather than awarding points for impressive wording. The model favors recurring, profitable revenue and discounts non-recurring revenue. A project you hope the client repeats isn't a contracted monthly fee.
I'd use the following comparison to challenge your forecast before a buyer does. It identifies support for an assumption and the gap that would make me question it. It doesn't assign a price premium to a clause.
| Term to Review | What Supports the Forecast | What I Would Question |
|---|---|---|
| Annual price step | A fixed increase in the signed agreement, with the required advance notice and an effective fee reconciled to billing. | A planned increase counted as current contracted revenue, or a step whose implementation you cannot demonstrate. |
| Term and renewal | The current agreement period and the actual renewal mechanism, linked to the forecast period. | An expired agreement or an assumption that the client must remain after its current commitment. |
| Termination and notice | The applicable exit rights and notice requirements, assessed against the period of revenue being forecast. | A long headline term treated as certain income without examining how either party can end it. |
| Scope and separate charges | The flat monthly service, its exclusions, and separately priced work documented consistently with delivery. | A recurring fee beside unresolved promises that could require additional delivery work. |
| Transfer and control | Counsel has assessed the proposed transaction against the actual contract and identified the required actions. | A forecast assuming continuity while a material consent or other contract question remains unresolved. |
Bring these questions to the signed agreement and its amendments. A renewal date in your billing system is a pointer to the document, not a substitute for it. Give the agreement the same client reference as the revenue row so the buyer can follow the connection.
Reconcile the Price Step Before Annualizing It
The model calls for a fixed 5% annual increase written into the contract, with clients told ahead of time. That recommendation doesn't amend an agreement you've already signed. Have the account owner identify the applicable wording and notice, then ask your bookkeeper to verify the effective amount against the invoice.
Annualized revenue extends a monthly amount across a full year. In the hypothetical client above, assume unchanged scope and a full year at each fee: $4,500 × 12 = $54,000, while $4,725 × 12 = $56,700. The annualized revenue difference is $56,700 − $54,000 = $2,700.
If the new price begins partway through the year, that year's revenue increase will differ from the annualized comparison. If the increase hasn't been implemented or the agreement doesn't support it, keep it out of current contracted revenue. Show it as a proposal requiring action instead.
That distinction gives a buyer something concrete to assess. The billed fee is demonstrated; an unsigned proposal is a forecast assumption. A rule of thumb doesn't send a valid notice, however carefully you format the spreadsheet.
Read the Exit Wording Before Counting the Remaining Term
A contract's stated end date doesn't by itself answer how long the fee will continue. Ask your transaction lawyer to review the termination rights and the notice provisions together. Record the relevant conclusion next to the revenue period you're relying on.
I'd distinguish a documented commitment from a renewal you still need to obtain. If counsel identifies an exit right that affects your forecast, have the person building the forecast show the affected period and explain the assumption used. Don't manufacture a probability of cancellation to make the uncertainty look calculated.
Where notice is needed, assign someone to coordinate it with counsel and keep the evidence of completion. A reminder marked complete should lead to the actual record. Asking someone to send a notice isn't proof that the contractual requirement has been met.
Make the Scope Explain the Cost
The model's flat monthly fee comes with plain inclusions and exclusions. The scope page is the part of the agreement describing that covered work. Put its current version beside the delivery team's account record and identify any disagreement about what the fee buys.
Suppose the hypothetical $4,500 client has an unresolved promise about project work. Keep that as an open scope issue until the agreement and delivery obligation have been assessed. Don't present a more profitable version of the account by silently dropping work the client may still be entitled to receive.
Ask your delivery lead to trace the agreed work into the cost forecast. If resolving the scope requires additional labor or tools, show that cost before describing the future profit. A recurring invoice is useful revenue evidence, but it can't establish the margin by itself.
Review Control and Assignment Against This Deal
A change of control clause addresses consequences when control of a contracting party changes. Assignment concerns a transfer of contractual rights or obligations. Give your transaction lawyer both sets of wording alongside the proposed deal structure, including the definitions and exceptions in the full agreement.
Have counsel determine whether the transaction triggers a requirement and what needs to happen next. Record their conclusion rather than assuming a share deal or an asset deal settles the question from its label alone. If consent is required, retain the completed response with the assessment.
An unresolved contract question isn't automatically lost revenue. It is also not cleared by your intention to resolve it. I'd identify the amount affected and have your advisers explain how the dependency is being handled in the deal.
Connect the Contract Findings to the Price Discussion
EBITDA means earnings before interest, taxes, depreciation, and amortization. The model values an MSP using a multiple of EBITDA; the contract review helps test the continuing revenue and delivery costs behind that earnings figure. The $2,700 annualized revenue difference isn't automatically $2,700 of additional EBITDA.
I'd support a stronger earnings forecast with an implemented fee and a defensible delivery cost. I'd challenge earnings built on an unapproved increase or an unresolved service obligation. Where continuing revenue depends on a contract action, make that dependency visible before discussing the price based on those earnings.
The eventual offer still depends on the buyer's assessment and the negotiated transaction. Don't multiply revenue by an invented contract-quality premium. A longer term with unclear obligations needs examination just as much as a short one.
Start with a client whose contract and forecast don't yet agree. Have your lawyer resolve the clause question and your finance lead reconcile the resulting fee and cost assumptions. Give the buyer the supported conclusion and the unresolved action, each attached to the revenue it affects.
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Written by Graham Whitfield
MSP Outpost publishes information, not legal, financial, insurance, tax or compliance advice, and reading it creates no professional relationship. For decisions about your business, talk to a qualified professional.