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Confidential opportunity to acquire an established Managed Services Provider with ~20 active clients and three anchor accounts, supported by strong re-occurring and contractually recurring revenue. The company is positioned around a cybersecurity-first delivery model and experience in regulated environments, creating durable client relationships and a sticky services footprint.The business operates on a standardized, enterprise-grade vendor ecosystem with proven partner relationships, enabling consistent delivery and straightforward post-close integration. Core vendor stack includes Datto, Sophos, Microsoft 365, Auvik, CyberFOX, Huntress, Barracuda, and Duo MFA.Highlights include:•Cybersecurity-forward MSP with regulated vertical exposure (healthcare financial services) •Owner retirement-driven sale with seller motivated by a clean, timely transaction•SBA-friendly posture: seller open to supporting an ETA/SBA close with standard documentation and transition support•Integration-friendly for strategics and roll-ups; cross-sell potential for security services•Deal flexibility: full-price w/ retention protections or discounted all-cash considerationFor further details and to express interest, please contact us to arrange a confidential discussion.NDA required to receive the comprehensive Executive Summary crafted by ProNova Partners.
Why we like it
- Earnings Quality: 69% cash flow margin on $750k revenue signals strong unit economics and pricing power in a specialized niche. The recurring contractual revenue base with three anchor clients provides predictable cash generation, while the cybersecurity focus commands premium pricing compared to commodity IT services.
- Durability & Moat: Regulated vertical exposure in healthcare and financial services creates high switching costs and compliance lock-in that competitors struggle to replicate. The standardized vendor ecosystem with proven enterprise partnerships reduces client churn and creates operational leverage that scales efficiently.
- Market Tailwinds: Cybersecurity spending is non-discretionary for regulated industries, with compliance requirements only increasing over time. SMBs in healthcare and financial services face mounting regulatory pressure but lack internal expertise, creating a growing addressable market for specialized MSPs.
- Operator Advantage: The seller's retirement motivation and SBA-friendly documentation suggests a smooth transition with potential for immediate operational improvements. Three anchor accounts provide stability while 17 smaller clients offer cross-sell expansion opportunities for additional security services and higher per-client revenue.
How to improve it
- Client Concentration Analysis: Map the revenue distribution across the 20 clients to understand dependency risk and identify the smallest accounts for potential upselling or pruning. Focus first 30 days on securing renewals with the three anchor accounts and documenting their specific compliance requirements.
- Pricing Optimization: Audit current pricing against market rates for cybersecurity MSP services, particularly in regulated verticals where clients pay premiums for compliance expertise. Implement tiered security packages to capture more wallet share from existing clients within 60 days.
- Vendor Stack Consolidation: Evaluate the current tool stack for redundancies and negotiate better pricing through volume commitments, potentially reducing COGS by 10-15%. Standardize client onboarding processes using the existing enterprise-grade tools to improve margins on new accounts.
- Sales Process Systematization: Build a repeatable lead generation system targeting healthcare and financial services companies in the Salt Lake City market, leveraging case studies from the existing regulated client base. Create standardized security assessments as loss leaders to demonstrate value.
- Service Expansion: Package additional high-margin security services like compliance auditing, incident response, and security awareness training for existing clients. The regulated vertical focus provides natural demand for these premium add-ons that can double per-client revenue.
- Geographic Expansion: Use the standardized delivery model and vendor relationships to replicate the business in adjacent markets, particularly other mid-sized cities with strong healthcare and financial services presence. Remote delivery capabilities enable scaling without proportional overhead increases.
- Talent Optimization: Assess current staffing levels and technical certifications to ensure the team can support growth while maintaining service quality. Invest in additional cybersecurity certifications to justify premium pricing and improve client retention.
Diligence notes
- Client Concentration Risk: Request detailed client list with contract terms, renewal dates, and revenue breakdown to assess dependency on the three anchor accounts. Verify average contract length and historical churn rates, particularly focusing on any recent client losses or pricing pressure.
- Regulatory Compliance Verification: Validate the company's actual compliance certifications and audit history with regulated clients, as this is core to the value proposition. Check for any outstanding compliance issues, client complaints, or regulatory violations that could impact renewals or expansion.
- Vendor Relationship Terms: Review all vendor agreements to understand pricing tiers, volume commitments, and transferability post-acquisition. Verify that current vendor relationships and certifications will transfer cleanly and assess any minimum purchase requirements or partnership obligations.
- Financial Quality Check: Analyze the $515k cash flow figure for one-time expenses, owner add-backs, and working capital requirements, particularly focusing on accounts receivable aging and payment terms with regulated clients. Verify that recurring revenue is truly contractual versus month-to-month arrangements.