Contracted MRR as a percentage of revenue comes first. Then churn and contract length, then client concentration, then how standardized and documented your stack is. A book of auto-renewing multi-year agreements across a diversified client base with a documented toolset is the asset they want. A bespoke environment held in one engineer's head is a diligence problem, however profitable it looks.
Platform buyers run technical and financial diligence at a level most owners have never experienced, including per-client profitability. Knowing which clients actually make money before a buyer tells you is both a negotiating advantage and a reason to fix pricing early. Expect questions about security posture, documentation and your own dependency on individual engineers.
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A competitor acquiring for geography or a vertical specialization you have built may value that specific asset more highly than a financial buyer would, and may move faster. If you want a clean exit rather than a rollover and a multi-year commitment, a strategic is often the better route. Having both in a process is how you find out.
Managed service providers commonly sell for 6 to 10 times adjusted EBITDA, with the highest multiples going to businesses with a high proportion of contracted monthly recurring revenue, low churn, multi-year agreements and no heavy client concentration. Project-heavy IT businesses sell for meaningfully less.
Convert project clients onto contracted recurring agreements, lengthen contract terms, reduce client concentration, standardize and document your stack, and fix pricing on unprofitable accounts. These changes take one to two years to show up in the financials, which is exactly why starting early pays.