Private equity firms are buying managed service providers at a record pace, and most of the businesses those MSPs serve have no idea what is coming.
In the fourth quarter of 2023, 185 MSP mergers and acquisitions were announced. Fifty-five percent of those deals were led by private equity and financial buyers rather than strategic ones, according to Founders Advisors. By the first quarter of 2025, another 106 deals had been announced in the US and Europe, according to Drake Star Partners.
Why the rush? MSPs have what investors love: recurring monthly revenue locked into long-term contracts with clients who cannot easily walk away. The business is predictable, the cash flow is steady, and the underlying demand keeps growing.
But what looks good on a spreadsheet does not always look good to the clients on the other end of the invoice. And if you are a business owner who depends on an MSP, you should understand what happens when your provider gets bought.
In my thirty years in this industry, I have watched the PE acquisition wave build from a trickle to a flood. I have talked to business owners caught in the aftermath, and I have studied the data on what actually changes after a provider is acquired. This is what I have learned.
Why Private Equity Wants MSPs
The fundamentals are straightforward. About 60 percent of an MSP’s revenue typically comes from recurring monthly contracts. Clients are sticky because switching providers is disruptive. Margins can be strong when the operation is run well. And the market is fragmented, meaning a private equity firm can buy up dozens of smaller shops and roll them into a larger platform.
The Netwolf Cyber 2025 risk analysis of PE-backed MSPs put it clearly: the recurring revenue model is what makes these businesses attractive. But that same analysis warned that the drive to optimize those financial metrics can come at a real cost to service quality.
What Changes After the Acquisition
The 2026 WatchGuard MSP Cybersecurity Trends Survey found that 58 percent of SMBs plan to switch MSPs within the next three years. The number one reason is unmet expectations for security outcomes. And PE acquisitions are a significant driver of that dissatisfaction.
Here is the pattern I have seen repeated after acquisition:
- The people who knew your account are gone. Staff reductions of 15 to 30 percent are common after a PE deal. The highest-paid technicians, the ones who actually knew your environment, tend to be first out the door. They get replaced with less experienced people at lower salaries, or their workload gets spread across a smaller team.
- Your bill goes up. Price increases of 20 to 40 percent within the first year are typical. The PE firm paid a premium for the business and needs to improve returns. Your invoice is the fastest lever they have.
- Your account manager disappears. That person who knew your systems, knew which vendor to call, knew that your CFO will not answer emails on Fridays gets replaced by a client success team handling 40 accounts instead of 15. You become a ticket number.
- The tools change. The PE firm standardizes on its preferred stack. Your MSP spent years building custom workflows on one platform. Now they are migrating everything to whatever the parent company selected.
- Support gets worse. Centralized service desks replace local technicians. Response times increase. The personal relationship you had with your provider is gone.
How Many Acquisitions Actually Fail?
Only 44 percent of mergers and acquisitions achieve their expected synergies on time, according to a 2023 BCG study. When go-to-market integration such as sales alignment, marketing, and customer experience gets pushed to phase two, companies see 15 to 25 percent revenue underperformance, according to KPMG’s 2023 research.
Eighty-three percent of acquiring executives say that early integration of sales, marketing, and customer experience is critical to deal success. But most PE firms focus on the tech stack and back office first. The client-facing side of the integration gets delayed, and that is where the damage happens.
What This Means for You
If your MSP gets acquired, you can stay and hope for the best. Or you can start asking hard questions now, while you still have leverage.
- Ask about ownership. Is your MSP independently held? Is there a PE firm or holding company above them? You have a right to know who is ultimately making decisions about your IT.
- Ask about staffing. Can your provider tell you their technician turnover rate? Do they know who is working on your account and how long those people have been there?
- Read your contract carefully. Does it have a clause that limits price increases? Does it define what happens if there is a change of control? If those provisions are not in your agreement, they may be very difficult to add after the acquisition closes.
- Know your data. Where does your documentation live? Do you have current network diagrams, password inventories, and vendor contact lists? If your relationship ends badly and your provider will not cooperate with the transition, you need to be able to hand the new provider something useful.
The MSPs Who Will Win Long Term
I have built my career on one idea: the best MSPs are the ones who help their clients succeed, not the ones who maximize their own exit value.
The providers who will thrive over the next decade are the ones who keep their best people, document for service quality rather than due diligence, charge prices that are fair without being predatory, and measure success by client retention and outcomes instead of EBITDA multiples.
Private equity is not going away from the MSP space. But the clients who understand what is happening and prepare for it will be the ones who land on their feet.
Frequently Asked Questions
How many MSP acquisitions involve private equity?
In Q4 2023, 55 percent of MSP M&A transactions were led by financial and PE buyers. Q1 2025 saw another 106 announced deals in the US and Europe. The pace continues to accelerate into 2026.
What are the biggest risks after a PE acquisition?
Per Netwolf Cyber’s 2025 analysis: staff reductions, loss of personalized support, diluted accountability across centralized structures, higher prices, and decision-making driven by financial metrics rather than client experience.
How many acquisitions fail to deliver expected value?
BCG found only 44 percent achieve expected synergies on time. Poor go-to-market integration is a primary cause, with 15 to 25 percent revenue underperformance per KPMG.
What should I look for in my MSP contract?
Key provisions include: limits on price increases, a change-of-control clause, clear offboarding procedures, defined security responsibilities, and data return requirements if the relationship ends.
How do I know if my MSP is being acquired?
Warning signs include new leadership or ownership changes, unexplained price hikes, staff turnover on your account, forced tool migrations, and declining communication quality. Ask your provider directly. A trustworthy one will give you a straight answer.
Brent Lacy has spent nearly 30 years in the IT industry building and advising managed service providers. He is the author of Rewired MSP: Mastery, Scalability and Performance, vCIO Rewired: Virtually Conquering IT Obstacles, and Near Miss: Preventable IT Failures Threatening Your Business Security. He does not sell consulting services or subscriptions. He shares what works.
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