Top 10 Trends That Shaped the MSP Industry in 2025

Blog by Ben Greenberg, VP of Corporate Development at IT Solutions
If you’re considering exiting your business or are navigating the challenges of growing your MSP, we invite you to connect with Ben.

With another year quickly approaching, I can’t help but look back at where the year began. Over the course of the year, new opportunities and challenges have presented themselves for the MSP industry. I thought it would be fun to look back and present my thoughts on the Top 10 trends that drove the MSP Industry in 2025, for both M&A and non-M&A. In no particular order.

M&A platform consolidation: 2025 saw more platforms combine than any other year, showing signs that investors continue to believe in the strength of the MSP industry and that scale (done correctly) does have value.
CMMC: This four-letter acronym took the government-exposed SMB market by storm in 2025, forcing even the smallest MSPs to understand how they can service this market demand. Taking security services to a whole new level. If anything, it looks like this trend will accelerate into 2026.
Agentic AI: I would challenge anyone to find a more used buzzword in the last year. It’s an exciting time for MSPs as most are just scratching the surface on how they can use AI to streamline service delivery and add value to their clients.
Flight to quality in M&A valuations: We saw acquirers more aggressively place a premium valuation on MSPs with strong fundamentals, demonstrated organic growth, scalable operations, and strong client dynamics.
Automation: While sometimes used in conjunction with AI, what we really noticed is MSPs using automation to be able to deliver routine tasks more efficiently, reducing things like time on ticket, dispatching, or onboarding. The options are endless, but focusing on ROI is key.
Clients looking for AI solutions: As SMB’s begin to read more about the power of AI, they turn to their MSP’s (as they should!) for guidance, this has forced most to think about how they can service the client demand, however we’ve yet to see the masses truly deliver around managed AI at this point, an exciting frontier for 2026+.
Verticalization: By focusing on specific industry segments, MSPs have learned they can better meet increasing client demands with a deeper expertise, as well as differentiate themselves in a crowded market.
More educated sellers: We’re seeing sellers do more diligence on the types of buyers and are more focused than ever on finding the right partner to meet ownership goals, vs casting a wide net. Personally, I’m seeing sellers ask excellent questions when we have initial discussions, which is always enjoyable.
Strategic support: In an ever-changing and more complex technology environment, it’s almost table stakes to have a role focused on strategic guidance for each client. For the subset of MSPs who did not, we saw that quickly change.
Hiring ability: The times of the Great Recession are definitely over. This year, we saw greater ability to hire strong talent as the labor market has eased and people are eager to join the exciting IT services segment.
Overall M&A acceleration: The pace of smaller MSPs looking to exit in 2025 continued to accelerate, with overall demand remaining strong as market consolidation continues and investor interest remains high for well-operated MSPs.

On a personal note, THANK YOU to all the amazing people I’ve met over the course of the year. The industry is full of incredible individuals, and I’ve learned more than I could have ever imagined from each of you.

And yes, there are 11 trends here, not 10. Why not?

Unlocking growth through M&A presents unique opportunities and challenges. Whether you’re planning your next acquisition or considering selling your business, we’re here to help your MSP thrive.

Top 3 MSP M&A Insights from 2025

The Managed Service Provider (MSP) industry continues to see heavy M&A activity on both the sell and buy side. I’ve noticed a few interesting developments in the first half of 2025, across three key themes: seller behavior, valuation trends, and integration strategies.

Smarter Seller Behavior: A Strategic Shift

One of the most notable trends observed this year has been the increasing sophistication of sellers in the MSP space. For educated sellers, the days of casting a wide or random net for the sole purpose of trying to maximize a valuation are gone. Sellers are becoming far more knowledgeable about the “types” of buyers in the market. This strategic approach allows sellers to focus their energy on engaging with buyers who align with their culture, exit plan, and organizational and financial goals. This does not mean valuations are going down; in fact, it is quite the opposite, as buyers are becoming more strategic as well in isolating key acquisition candidates and are typically willing to pay premiums for solid matches.

Valuation Trends: A Diverging Landscape

While MSP valuations, on average, seem to be holding steady, a key trend that began last year has continued to intensify: the divergence between strong assets and less strong assets. High-quality MSPs with good organic growth, scalable operations, and strong client dynamics are commanding premium valuations, while weaker assets appear to be struggling to maintain their footing in the market.

For MSPs looking to sell who have not historically hit the mark on operational metrics, it could still be a good idea to talk to potential buyers. They often will give advice on how to improve operations to a point where valuation becomes more attractive for a seller. At ITS, at any given time, we work with several MSPs to improve their key value drivers and help them build valuation, even if it’s for a planned exit 12 – 24+ months down the line.

Integration: The Growing Importance of Cohesion

Integration, historically a debated aspect of platform growth, is emerging as a focal point for MSP platforms that historically downplayed its significance. Over the past few years, some platforms favored a “stand-alone” approach, preferring to maintain independent operations across their acquisitions. However, in the first half of 2025, we’ve seen a noticeable shift in this narrative as more platforms begin to appreciate the value of combining operations.

While full-scale integration remains daunting, platforms are taking incremental steps toward alignment. Whether merging back-office functions, standardizing processes, or fostering cross-team collaboration, the industry is recognizing that integration is where the most employee and client value lies.

For us, integration has been a cornerstone of our strategy from day one. We’ve spent years refining best practices, learning from challenges, and adapting to the unique dynamics of each acquisition. While we take pride in the progress we’ve made, we also acknowledge that integration is always a continuous journey with room for growth.

Looking Ahead

We expect the MSP space to continue showing strong activity in the second half of 2025. M&A remains one of the hottest topics in peer groups, industry events, and social media, and it assists in educating smaller MSPs. In addition, several platforms will most likely look to trade in the second half of the year as they continue to build value under new ownership.

Unlocking growth through M&A presents unique opportunities and challenges. Whether you’re planning your next acquisition or considering selling your business, we’re here to help your MSP thrive.

To Integrate or Not to Integrate?

The managed service provider (MSP) industry has been experiencing significant consolidation, with various players adopting different strategies. These strategies range from local to global acquisitions and from no integration to full integration of the acquired entities. Whether you’re a buyer or seller, choosing the right path depends on your goals, capabilities, and appetite for change. In this article, we’ll explore different integration strategies and what to consider when evaluating each.

Understanding M&A Roll-Up Strategies

Local: Local roll-ups focus on acquiring MSPs within a specific geographic region. This approach allows for the consolidation of market share and driving economies of scale in a specific state or region.
National or Multi-National: National or multi-national roll-ups involve acquiring MSPs across a country or multiple countries. They require a stronger centralized management team (even if not fully integrated) and more substantial financial backing than a local strategy.
Vertical Focused: Vertical focused roll-ups target MSPs with expertise in specific verticals (e.g. legal, healthcare, finance, etc…). Strategies can be national or local in scope and often strengthen capabilities within a focus sector(s).

Levels of Integration: From Independent to Unified

No Integration: At this level, the acquired MSPs continue to operate independently, maintaining their brand, systems, and processes. Buyers might choose not to integrate because of limited integration capabilities or lack of cultural fit between the organizations. While rare to see an MSP roll-up without any level of integration, it’s not unheard of.
Partial Integration: Partial integration aligns certain aspects of the acquired MSPs, such as back-office functions (like finance or HR), while each MSP’s operations run completely independently. This approach can allow for a light centralized management team that ensures best practices are still being driven across the entities.
Full Integration: Full integration merges the acquired MSPs into one company with a unified brand, systems, and processes. Although full integration is more complex and expensive, the benefits can be immense. In a full integration strategy, clients can still rely on local support while receiving enhanced capabilities. Career development opportunities become available for employees that were not available at the smaller MSP. Owners can minimize personal risk while stepping into a new role at a larger organization—or stepping away entirely after an agreed-upon transitionary period (I’ve seen this anywhere from three months to multiple years).

So, what’s the right strategy?

You probably saw this coming, but there is not one “right” strategy for MSP roll-ups; it depends. Buyers that attempt partial or full integration without a seasoned executive team and demonstrated growth engine, will most likely fail. However, with a strong management team, experience scaling a business, and a proven track record; a fully integrated strategy could open doors to maximize client value and give employees new opportunities that a non-integrated strategy can’t provide.

For sellers, it depends on your personal and business goals. If your main intent is to maintain your current role while taking some “chips off the table,” a no-integration, local buyer may be optimal. Conversely, sellers seeking a new challenge or planning an exit entirely in the near future, they might prefer partnering with a fully integrated organization.

The bottom line is that each buyer and seller should know their goals and consider all options before engaging in the M&A process. This helps narrow the field, aligning the right buyers and sellers to create opportunities for stronger partnerships early on.

Unlocking growth through M&A comes with unique opportunities and challenges. Whether planning your next acquisition or considering selling your business, we’re here to help your MSP thrive.