Support Customer List Valuation With a Client Schedule

Value the Earnings Behind the List

For an MSP sale, the model values the business as adjusted EBITDA multiplied by the multiple for its EBITDA size. EBITDA means earnings before interest, taxes, depreciation, and amortization. The model's valuation multiple changes with the size of those earnings; it isn't a fixed price per client. Its B24 position also discounts non-recurring revenue.

The schedule helps establish which recurring fees the business can retain and what service margin they support. Check that the recurring-revenue fields exclude one-off work. Trace retention from the same starting clients, show concentration by connected client group, and flag contract terms your transaction adviser needs to assess. These fields give the buyer questions to investigate; none supplies an automatic percentage adjustment to the price.

I'd calculate earnings from the reconciled revenue and the costs needed to deliver it, then apply the appropriate model multiple. If a client leaves, change both its revenue and the costs you can actually remove before recalculating. Don't multiply the list's MRR by an invented per-client sale multiple.

Fix the Date and the Revenue Definition

Choose the date the schedule describes and put it at the top. Use a stable client identifier so the same client can be traced through contract and accounting records. Have the finance owner confirm what the recurring amount includes before filling the column.

Keep managed-service fees separate from recurring products. Put hardware and projects in their own revenue fields when you include them. Otherwise an invoice with equipment on it can overstate the monthly service commitment.

Record a signed future start separately from an active contract. Do the same for a cancellation already notified but not yet effective. A single current-MRR column cannot explain both the present bill and a known future change.

Use the actual contract currency and identify it. Don't combine currencies into an unexplained total. If the transaction work needs a converted view, have the finance owner document its conversion basis separately from the underlying amounts.

Use Fields That Can Be Traced

I'd keep the main sheet readable and link each row to the evidence. The client schedule is the index to those records. It shouldn't require the owner to explain from memory which agreement or invoice is current.

Have the transaction adviser assess what the continuity provisions mean for the proposed deal. Don't turn a contract summary into your own legal conclusion that a client transfers automatically. Keep the clause reference beside the question so it can be answered.

Make a missing document visible. An empty cell can mean unknown, not applicable, or not checked, so distinguish those states. Assign someone to resolve the unknown rather than entering the term you usually use.

Prove the Current Fee Before Annualizing It

For the illustrative client, $4,500 times 12 is $54,000 of annualized managed-service revenue. Annualized means the current monthly amount extended across a year. It isn't proof that the client paid that amount during the past year or will remain for the next one.

Check the covered seats and fee against the agreement in force at the schedule date. Then compare the resulting bill with the billing record. Explain a difference, such as an effective-date change or an agreed concession, with the supporting document.

The model calls for a fixed 5% annual increase written into the contract, with advance notice.

For the unchanged hypothetical $4,500 fee, calculate the increase as $4,500 × 0.05 = $225 a month. Adding it gives $4,500 + $225 = $4,725. A full year at the new rate adds $225 × 12 = $2,700.

Those calculations assume the same seats and scope throughout. A later effective date changes the revenue recognized during the year. A missing contractual right or an unapplied increase cannot be entered as current billed revenue because the model recommends it.

Reconcile the Total and Show Concentration

Sum the rows using the definition you agreed. In the model's illustrative book, 35 clients at $4,500 of managed MRR produce $157,500. Extending that amount across a year gives $1,890,000 of annualized managed-service revenue.

Use your actual rows rather than forcing the total to match a headline. Explain the difference between a point-in-time schedule and the period covered by the accounts. Keep any adjustment visible so another person can repeat the reconciliation.

Customer concentration is the share of the relevant revenue total supplied by a client or connected group. In the equal-client example, $4,500 divided by $157,500 is about 2.86% of managed MRR. That says nothing about the distribution in your real book.

Calculate shares on the same basis for every row. A managed-MRR share and a share of total revenue answer different questions. Show connected groups where relevant rather than assuming separate invoices mean separate commercial exposure.

Measure Retention From the Same Starting Clients

Client retention counts how many of the starting clients remain. Revenue retention measures the revenue retained from the starting client group. State which one you're reporting before using a percentage.

The MSP model's 95% annual retention is a planning assumption, not a finding about your clients. Build the actual comparison from dated records. Show lost clients separately from price and scope changes, and keep newly won clients out of the starting group.

Dan Mallard warns that a change in a client's main contact can unsettle an apparently healthy relationship. He recommends appropriate relationships with other client leaders. I'd record a known contact dependency as a review point, without pretending it supplies a numerical discount to the sale price.

Check a Row Before Sharing the Schedule

I'd have someone trace a completed row from agreement to invoice and back to the total. Check a row with an amendment or price change as well. The exception is where an attractive summary is most likely to need an explanation.

Agree access and disclosure with your transaction advisers before sharing identifiable client data. Keep a dated copy of what was supplied and an owner for later corrections. Start with the source gap you cannot currently explain; filling that gap is more useful than adding another valuation formula.