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.
One of the oldest expressions in M&A is one I’ve seen to be tough for some founders to grasp: the best time to sell your business is when you’ve never felt better about it. In practice, this means selling at the moment when you least want to sell. This tension is what can be referred to as the exit paradox.
Too often, sellers who wait for “one more year” often discover that the MSP business at a larger scale is far more fragile than it appears.
The most obvious reason for the exit paradox is leverage. In this active MSP M&A environment, buyers are maniacally focused on quality. Recurring revenue growth, strong gross margins, low churn, and operational maturity (just those small things!) command premiums.
Buyers can sense when a process is defensive rather than strategic. Even if a deal gets done, it is often at a discounted valuation or with unfavorable structure. In the worst cases, the seller finds themselves in a “burnout sale” situation, a transaction driven more by fatigue than by choice.
The second driver of the Exit Paradox lies in what we often refer to as impact zones. For many MSPs, the $5-7M revenue mark is the most common example. It’s not unusual to see two or three years of strong growth leading up to this level, followed by a period of churn, margin pressure, and organizational strain.
At this stage, enterprise value often stalls (or declines), sometimes for several years. Owners assume growth will resume shortly, yet the operational investments required to break through the next ceiling take longer and cost more than expected.
MSPs are one of the least cyclical businesses; that’s true. However, most are not immune to broader macro dynamics. For example, per-user pricing models could expose MSPs to headcount reductions during economic slowdowns or price pressure as procurement and finance departments look for cost savings. Beyond traditional cycles, structural shifts such as AI, automation, and vendor consolidation introduce longer-term uncertainty and investment.
For owners with a short-to medium-term exit horizon, this raises an important consideration: potentially partnering with a buyer who offers a reinvestment opportunity, allowing the seller to participate in potential upside while still materially de-risking.
There is no hard rule here. Time horizon matters, for example. An owner planning to operate for another decade may reasonably accept short-term volatility in pursuit of long term value. Similarly, personal readiness plays a role. If an owner is not emotionally prepared to sell, even a peak valuation may not matter.
This may be one of the biggest misconceptions I see sellers have. I’ll say it again: The best time to sell your business is when you’ve never felt better about its future. That would typically mean a business that is well invested, growing, properly staffed, and one you’d be genuinely excited to lead for the next five years. Sellers who try to game the numbers with temporary profit spikes quickly realize that sophisticated buyers aren’t easily fooled. They will simply normalize those financials or provide a lower valuation multiple to compensate for the deferred maintenance.
Understanding this paradox doesn’t mean every strong business should sell. It simply means that owners should recognize when overconfidence is masking outsized risk, and when waiting may be costing more than it appears.
If you’re thinking about the next chapter for your business, gaining perspective early can make a significant difference in how and when you pursue a transaction.
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. Visit our M&A advisory page for additional insights or connect with Ben Greenberg to discuss your business and explore potential paths forward.
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