Discover how an MSP in Texas improved profits, valuation, and scalability with practical steps every MSP can use to strengthen their business foundation.
Meet an MSP in Texas, a growing IT service provider that looked successful on the surface but faced the same challenges many MSPs quietly struggle with.
They had loyal clients, a hardworking team, and steady revenue growth. But behind the scenes, they were dealing with tightening margins, unpredictable cash flow, and uncertainty about how buyers or investors would truly value their business. Like many Managed Service Providers focused on growth, they were great at technical delivery but needed clarity on their business model.
When I first met their leadership team, they said something I’ve heard countless times:
“We’ve grown fast, but we don’t really know how much our business is worth or how to make it worth more.”
That marked the beginning of a journey that completely transformed their approach to growth and valuation.
Step 1: Finding the Real Problem
Before discussing valuation, we delved into what was truly holding them back. The discovery process revealed four key issues that most MSPs face:
- Outdated pricing models. Several clients were still on rates set years ago, with no adjustment for inflation, cost increases, or expanded service delivery.
- Customer concentration risk. Too much revenue was coming from one or two large accounts, leaving the business vulnerable if one client decided to leave.
- Manual processes. The team was stuck in repetitive operational work that could have been automated, draining both profit and morale.
- Undefined growth channels. They relied heavily on referrals without a clear plan to win new, higher-margin clients.
Step 2: Building a Plan for Profit and Valuation
Once we identified the bottlenecks, we developed a clear plan. Here’s a simplified version of what we implemented and how it changed results:
ChallengeAction PlanMeasured ResultUnder-pricingIntroduced tiered service levels with performance-based renewalsIncreased contract value by 15%Concentration riskBuilt a balanced portfolio to ensure no single client exceeded 20% of revenueReduced dependency and increased stabilityManual processesImplemented automation for ticket routing and reportingReclaimed 10–15% of team capacityUndefined growthDeveloped a vertical-focused go-to-market planClosed higher-margin clients within 90 days.
Every improvement was tied to an outcome that increased both profitability and valuation. These actions directly supported IT services’ profitability and made the company’s value drivers easier to demonstrate to investors.
Step 3: Measuring the Results
Within six months, the MSP in Texas had transformed its financial and operational foundation.
- Revenue per employee improved by over 20%.
- EBITDA margins increased from 11% to 17%.
- Recurring revenue became more predictable, improving valuation confidence.
- Team engagement rose because technicians could focus on higher-value work.
When buyers later evaluated the business, the conversation shifted from “how much risk do we see” to “how fast can we help them scale further.”
That shift from uncertainty to strategic clarity reflected stronger MSP business value drivers, positioning the company for long-term scalability.
Step 4: Key Lessons for Every MSP
- Review pricing annually. Please don’t assume clients will leave if you raise rates. They will go if you underdeliver due to low margins.
- Diversify your revenue base. Aim for a 5/60 rule: no single client over 20% of revenue, top 5 clients under 60%.
- Automate before you hire. Every hour of repetitive work can be turned into a higher-margin activity with the right tools and processes.
- Treat valuation as a living metric. It should guide daily decisions, not be something you think about only when you plan to sell.
Improving operational efficiency and increasing recurring revenue are two of the most consistent levers for long-term valuation growth in MSPs.
The Bigger Picture
This story is not about one MSP. It represents hundreds of conversations I have had with owners and executives who are brilliant at technology but want more clarity about the business side of growth.
Helping MSPs identify, measure, and accelerate their value is my primary focus every day. Whether you are looking to scale, raise capital, or prepare for acquisition, understanding your numbers and knowing where to focus next is the foundation of every successful outcome.
Call to Action
💡 To find out how much your MSP is worth and see your current multiples for less than $100: https://bizadvisoryboard.com/msp-business-valuation/ Use coupon code LINVAL73 at checkout for the Evaluator.
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About Paul Daigle
Paul Daigle is a seasoned expert with over 30 years of experience in business scaling strategies and growth acceleration across multiple industries, with a strong focus on IT Service Providers. Throughout his career, Paul has consistently delivered comprehensive tools and systems that empower businesses at every stage of their development, driving substantial value enhancement and sustained growth. With a proven track record of managing over $1 billion in assets, successfully raising capital for more than 130 organizations, and expertly guiding companies through the complexities of going public, Paul’s dedication to helping businesses reach their fullest potential is evident in every meticulously planned, executed, and continuously optimized strategy he develops.
Paul’s extensive experience also includes serving on 12 public and private boards, where he has held the position of chairman on seven occasions. His strategic insight and leadership have been instrumental in guiding organizations through critical phases of growth, acquisitions, turnaround scenarios, and public offerings, establishing him as a trusted partner in driving long-term business success.
Want to learn more? Call Paul at 407-461-0061. Connect on LinkedIn: www.linkedin.com/in/pauldaigle100
Or schedule a meeting: https://bizadvisoryboard.bookafy.com/service/30-minute-Free-1st-strategy-session