Alaska IT Managed Services Provider, 16-Year MSP

$1.1M

Revenue

$600K

SDE

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Full Editorial Writeup

This is a full-service IT Managed Services Provider founded in 2008 and based in Alaska, serving 32 active business clients. The company specializes in application support and rounds out its offering with proactive maintenance, network design and implementation, cybersecurity support, and break-fix work. Delivery is primarily remote with occasional onsite work, which keeps the cost structure light and geography-agnostic on the labor side even though the client base is concentrated in Alaska.

The economics are the headline here. On $1,112,549 of trailing twelve month revenue the business throws off $600,101 of normalized EBITDA, a roughly 54% margin that is unusually strong for an MSP of this size. Recurring revenue represents 67.1% of the total, meaning the majority of the top line renews by default under managed-services contracts rather than being re-won every month.

The seller is stepping back from day-to-day, on-call duty after 20 years in the industry and wants to preserve long-standing client relationships under new ownership. They are willing to stay available to teach the specialized application support skills and help with larger projects, but do not want to remain the primary point of contact for routine issues. That transition offer is generous but also flags the core risk: this is a small, owner-dependent shop where deep technical knowledge sits in one person's head.

Why we like it

Earnings quality is exceptional for the size, with $600,101 of normalized EBITDA on $1.1M of revenue, a 54% margin that most MSPs never touch. Two-thirds of that revenue is recurring under managed-services agreements, so the base is predictable rather than project-driven. A buyer is acquiring durable cash flow, not a lumpy services book.
The MSP model is inherently sticky and recession-resistant. Businesses do not shut off cybersecurity, network maintenance, and application support in a downturn because the cost of failure or breach is far higher than the monthly fee. Switching providers is painful and risky, which protects the 32-client base from churn.
Market tailwinds favor MSPs broadly, with rising cybersecurity requirements, cloud migration, and compliance burdens pushing small and mid-size businesses toward outsourced IT. Alaska in particular has fewer local competitors and a captive commercial base, which supports pricing power. The 16-year operating history signals an entrenched local reputation.
The remote-first delivery model is an operator advantage. Labor can be sourced outside Alaska while billing Alaska clients, and the low onsite requirement means the business is not tied to expensive local headcount. That structure is what drives the outsized margin and makes it scalable under new ownership.

How to improve it

Attack the client concentration and account-density problem in the first 90 days by mapping revenue per client across the 32 accounts. Identify which clients are on flat break-fix versus full managed contracts, then upsell the break-fix and hybrid accounts onto recurring plans to push recurring above 80%. Every point of recurring revenue you add raises the multiple at exit.
Systematize and document the owner's specialized application support knowledge before the transition window closes. Build runbooks, ticketing playbooks, and cross-train at least one senior engineer so the business is no longer a single point of failure. This is the single biggest driver of both operational safety and terminal value.
Layer in a formal cybersecurity and compliance product tier given rising demand. Package managed detection, backup, and compliance reporting as a premium add-on and roll it across the existing base. This raises average revenue per client with minimal new client acquisition cost.
Institute standardized quarterly business reviews and multi-year contract renewals with the client base. Longer contract terms reduce churn risk and make the recurring revenue more defensible in diligence for the next buyer. Locking clients into annual or multi-year terms also smooths cash flow.
Build a lightweight, repeatable new-client acquisition motion, whether through referral incentives, local partnerships, or targeting adjacent Alaska verticals. The business has grown to 32 clients on what appears to be reputation and word of mouth, so even a modest deliberate sales effort could meaningfully expand the base.
Audit the technology stack and vendor agreements for margin leakage and consolidation opportunities. Renegotiating tooling, licensing, and third-party contracts across the client base can protect the already-high margin and create leverage as you scale headcount.

Diligence notes

Quantify client concentration immediately. With only 32 active clients, the loss of the top two or three accounts could materially impair EBITDA, so pull revenue by client for the trailing 24 months and confirm no single client exceeds a manageable share. Concentration is the primary risk in a book this small.
Stress-test the 54% margin. That figure is high enough to warrant scrutiny of what 'normalized' EBITDA excludes, particularly owner labor add-backs, since the owner performs specialized technical work that a replacement hire would cost real money to backfill. Rebuild the margin assuming a market-rate senior engineer replaces the owner's billable output.
Assess the owner-dependency and knowledge-transfer risk in detail. The seller explicitly does not want to remain the routine point of contact, so confirm which clients relationships are personal to the owner and how much of the specialized application support only the owner can currently deliver. Structure an earnout or extended transition tied to knowledge transfer.
Verify the recurring versus break-fix split behind the stated 67.1% recurring figure. Review actual contracts for term length, cancellation clauses, and auto-renewal to confirm the recurring revenue is contractual rather than merely repeat break-fix work. The durability of the whole thesis rests on how real that recurring number is.
Examine staffing and contractor arrangements given the remote delivery model. Confirm whether technical labor is W-2 employees or contractors, where they are located, and whether any key staff would leave at closing. The margin depends on a lean team, so any hidden reliance on the owner or a single engineer is a red flag.

Source

Originally listed on BizBuySell. View original listing →