Assume a hypothetical MSP has $250,000 of adjusted EBITDA, its earnings before interest, taxes, depreciation, and amortization after specific, supported changes for this analysis. If that earnings basis and the model's 4.0-times multiple are appropriate, $250,000 × 4.0 = $1,000,000 of indicated operating value. That isn't a buyer's offer. Selling a small business starts with checking what can transfer and which buyer could use it, before treating a model value as retirement money.
Have your accountant check those earnings before you compare sale routes. Keep the agreed adjustments beside the accounts they come from. Change the earnings basis and you've changed the first input in the valuation.
Read the Size References Carefully
The model regards an MSP below about $250,000 of EBITDA as barely sellable. Its separate institutional-buyer size reference is $1,000,000 of adjusted EBITDA. Treat both as planning cautions about the business and the possible buyer pool; crossing a figure doesn't produce a transaction.
The opening's $1,000,000 is a calculated operating value. The institutional reference is $1,000,000 of annual earnings. Getting the former result hasn't brought the business up to the latter size.
Keep the date beside the valuation assumption. The model's broader table uses 2025 MSP valuations from a seller's market; its 4.0-times figure below $500,000 of EBITDA comes from the top of the 2026 forecast range for that size. The model calls for yearly review. You're using a dated assumption, not quoting a buyer for your MSP.
For a smaller MSP, I'd test realistic routes with an adviser before deciding that reaching institutional scale is the only option.
Establish What the Business Earns Without You
The model pays you a fair-market owner salary before counting profit. Your technical delivery work also needs to be costed appropriately, without counting the same compensation twice. Taking your whole salary out of the expenses doesn't create earnings a buyer gets to keep.
Ask your accountant to reconcile the earnings to your records and explain each adjustment. Show which changes have been proposed and which have been verified. The buyer's eventual view of an adjustment is a separate question.
Write down the responsibilities a new owner would inherit. If the business relies on you for delivery or client relationships, name that work before deciding who can absorb it. You can then assess whether the proposed buyer would still need you in a continuing role.
Test the Routes Against Your Actual Goal
Investigate the routes below rather than treating them as offers unlocked by an earnings figure. Compare the payment timing as well as the work you'd still have to do. A route that keeps you working needs to fit the exit you want.
| Route to Investigate | What Must Be Established | Question for the Owner |
|---|---|---|
| Improve and Continue Operating | The improvement can be funded and can produce sustainable earnings after the work needed to deliver it. | Are you willing and able to keep running the business while those results develop? |
| Sell to Another Operator | The buyer sees a fit with the client work and can support the proposed transition. | What would this particular buyer receive, and what would it need you to keep doing? |
| Explore an Internal Transition | The intended buyer wants the role and can support a credible purchase and operating plan. | Does the person want ownership, and how would the commitment be financed and delivered? |
| Discuss a Defined Asset or Client-Relationship Transaction | Advisers establish what can be transferred and the buyer accepts the resulting rights and obligations. | What is actually being sold, and what happens if expected client work does not transfer? |
Take the proposed structure to your legal and tax advisers. Calling something a 'client book' doesn't settle what the buyer actually obtains.
For another operator, prepare an account profile that goes beyond the revenue total. Show the continuing work and what it costs to deliver. Don't assume the buyer's existing staff make the acquired service free.
For an internal transition, liking an employee's work isn't evidence of a workable ownership plan. Establish who would make decisions and which responsibilities you'd retain. Being able to discuss a gradual sale doesn't show that the business can fund all the proposed payments.
Improve Earnings With a Costed Plan
If you keep operating, start with the work holding back sustainable profit. The model calls for recurring, profitable revenue without dependence on you. Cost the proposed improvement and measure its earnings effect before valuing a result you hope to achieve.
For example, examine the effort behind a weak client agreement before choosing a response. A standardization project may reduce recurring work, but check its cost and demonstrated result. Assess a proposed higher fee against the service commitment and the client's actual decision too.
Don't calculate a merger by simply adding the sellers' earnings. Establish which costs would disappear and which work the combined business would still perform. Support the proposed savings before using them to justify a price.
Keep delivering the service while you assess the sale or operating improvement. Neglecting the business during negotiations can change the earnings you were hoping to sell.
Compare the Terms With the Headline Price
Indicative operating value is the value assigned to the operating business before transaction-specific adjustments. It isn't necessarily what you'll receive at closing. Ask your adviser to reconcile the proposed price to the actual payment and your remaining obligations.
Show delayed or conditional payments clearly. A fixed amount payable later exposes you to different risks from an amount tied to future performance. Have the terms reviewed for what makes each payment due and who controls the actions affecting it.
Describe your continuing work separately. If the buyer needs your technical skills or client relationships after closing, put the proposed duration and compensation in front of your advisers. Compare those responsibilities with the exit you actually want.
Don't fill missing deal terms with the model multiple. The opening arithmetic can't establish the buyer's funding or your net proceeds. It shows how earnings and a multiple interact, with the assumptions behind both inputs in view.
Prepare a Decision You Can Test
Put the checked earnings beside a description of your current work. Ask a qualified adviser to test realistic buyer routes and explain the assumptions behind any indication of value. Maintain the records so the next discussion can challenge the calculation.
Choose the next action that fits your goal. It might be a costed operating improvement or a conversation about a specific transfer. Below the model's earnings references, establish what you're transferring before multiplying a hopeful number and waiting for an offer.
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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.