Mergers and acquisitions (M&A) volume in North American IT services climbed to 122 deals in Q2 2025, compared to historical quarterly averages of 84 in 2018 and 96 in 2019. This momentum signals a future where consolidation among Managed Service Providers (MSPs) is the rule, not the exception and many owners are asking what their business will be worth in five or ten years.
But how does this race toward scale and sale impact how MSPs invest in marketing, serve their clients, and plan for the future?
We spoke with Ken Yao, founder of Cyberse, about the state of the MSP industry and the role M&A plays in defining success.
MSP Mergers & Acquisitions: The Inevitable Trend
Yao discussed that M&A is an inevitable trend for MSPs as they evolve from small tech-focused businesses into larger entities with multiple clients and partnerships.
“I think a lot of people get into MSPs as kind of… they stumble into it, right?” said Yao. “People are basically tech people trying to help and then they suddenly turn that into a small business and that evolves into, ‘Oh wait, now I have multiple clients, now I can grow things, I have these capabilities, these partnerships.’ And over the course of that career, as it evolves, it becomes ‘What do I do next?’
That natural growth is usually what gets MSP owners thinking about M&A in the first place.
“Over the past 20–30 years, it is something that is just kind of progressing and evolving. And that’s just the direction most of these businesses go over time.”
MSP M&As Can Be a Win-Win
Yao believes that overall, there is a net positive for the client when their MSP is focused on being acquired in the future. He highlighted that M&A shapes the definition of success for MSPs, leading them to focus on metrics such as customer acquisition cost, gross margins, and portfolio alignment.
“The MSP going M&A as a strategy is actually pretty good. Because it’s all about being consistent with your customer, and finding the synergies of driving down costs and making things more efficient.”
On the flip side, customers that see their MSP aiming to be acquired may be wary. Any acquisition brings change, and that often leads to turnover. Customers might say, “‘This company is acquiring my current MSP, I don’t know if I’m going to get the same people helping me out,’” added Ken. “There’s that trust aspect of, ‘Okay, this is someone who’s been with me that whole journey. They know my environment, and it’s someone to stick with.’”
Regardless, Ken believes there is an overall positive for both the MSP and their clients, as the strategy is often based on cost, efficiency, and consistency.
“The MSP going M&A as a strategy is actually pretty good. Because it’s all about being consistent with your customer, and finding the synergies of driving down costs and making things more efficient.”
Growth Starts on the Inside
In Yao’s eyes, improving internally is where the biggest ROI lies. Many MSPs are tempted to chase the latest products or flashy service add-ons to stand out. But real, sustainable growth usually comes from tightening operations, building efficiencies, and improving the way the business runs day to day.
“Where I see a lot of opportunity for MSPs to innovate is actually internally,” Yao said. “When it comes to MSP operations, or leveraging AI internally for the way they do things, or even doing marketing—those are really the opportunities for an MSP to get a little bit more creative in order to grow their business.”
Strong internal processes do more than cut costs—they build a foundation that supports every other growth lever. Streamlined operations improve customer experience by reducing errors and response times. Smarter use of AI and automation frees up staff to focus on higher-value work, which not only drives margins but also helps with talent retention. Even marketing benefits: when an MSP has clarity around its internal strengths, it can communicate its value more clearly and consistently to the market.
The bottom line? A well-run MSP is more attractive to both clients and potential acquirers. Internal innovation isn’t just about efficiency—it’s what makes an MSP scalable, profitable, and positioned for long-term success.
Specialization & Targeting Are The Differentiators for MSPs
Internal improvements give MSPs the stability to grow, but specialization is what gives them direction and makes them truly valuable in the eyes of both clients and potential acquirers. In a market where most MSPs offer similar services, the ability to clearly define who you serve and what you’re best at is what separates those that scale from those that stay stagnant.
“Target certain industries, target certain company sizes, and hone your message around that area. That’s the way to grow a small MSP into hopefully becoming a medium-sized one,” Yao said. “It takes a lot of work to really hone in on: ‘Here’s our specialty, here’s what we do.’”
Specialization doesn’t just drive growth—it makes MSPs more attractive targets by showing acquirers exactly where you fit in the market. Acquirers are more likely to pursue MSPs with a focused portfolio and a clear, differentiated value proposition than those offering a little bit of everything.
Ken added that the right portfolio match is key.
“The MSPs I’ve seen succeed usually have a combined strategy and handle distribution really well. It comes down to the right partnerships” Yao added. “Being able to say, ‘here’s my service portfolio, here’s the overlap and here’s where we can strategically merge capabilities together’ is key.”
Knowing your niche makes it easier to find partners who complement your strengths rather than compete with them. That clarity creates opportunities for strategic alliances today and smoother M&A integrations tomorrow.
Advice for MSPs Looking to be acquired
Ken provided three key pieces of advice for new MSPs aiming to be acquired in 10 years:
- Prioritize good financial management and deliberate investment.
- Build a unique brand and market niche to attract customers and establish a coherent business thesis.
- Focus on attracting and retaining talent, acknowledging that churn is natural in the MSP business but aiming for higher retention through a strong team culture and growth opportunities.
“My biggest belief about the MSP space is that it’s meant to be about trust, the ‘last mile,’ and the relationship and service behind it. That should be done in a way that’s consistent, scalable, and manageable.”
Conclusion
When focusing on M&A, MSPs naturally zero in on many of the things that matter most to their clients: strong internal business processes, sound financials, clear specialization, and service offerings built around specific customer needs.
At CyberBridge Marketing, we help MSPs refine their brand, clarify their message, and stand out in a competitive market. Schedule a free consultation to uncover ways to strengthen your business for growth (or even a future acquisition).
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