Merger and Acquisition Deal Activity: April Slowdown Confirmed

Can MSP Valuations Hold Up Amid Revenue Pressures?

Still, Q2 2020 will likely be an extremely challenging quarter for MSPs and other types of channel partner businesses.

As the pandemic continues to pressure business worldwide, the managed services market will likely decline 17 percent in Q2 2020, before rebounding in the second half of 2020, according to the ISG Index research report.

Roughly one-third of channel partners have two months or less in cash reserves, but 57 percent of partners believe they will meet or beat their original 2020 revenue plan, recent research from The 2112 Group reveals.

Amid all those variables, ChannelE2E expects deal flow to slow quite a bit throughout Q2 and Q3 2020, with valuations to remain under pressure through 2021. Before the pandemic arrived, MSPs were typically valued anywhere from 6X to 10X annual EBITDA. We suspect those multiples are slipping, and some deals likely involve less guaranteed money at the time of sale.

by Joe Panettieri

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