Over the past year, I have noticed an interesting trend in my conversations with MSP owners. More and more founders are bringing up artificial intelligence as a reason they are considering selling their company. What’s interesting, however, is that very few of them are telling me that AI is hurting their business today. Instead, they are worried about what AI may require of them over the next five years.
Many of these owners are in their 50s, 60s, and even 70s. They have already navigated multiple technology shifts throughout their careers. They survived the move from on-premise infrastructure to cloud computing, built recurring revenue models, expanded cybersecurity offerings, and adapted their businesses to changing customer demands. Now, they are looking at AI and wondering if they really want to spend the next chapter of their career reinventing their business yet again.
For some founders, the answer is no.
As a result, I am seeing AI become a motivator for selling sooner rather than later. Not because the business is struggling. Not because customers are leaving. And certainly not because valuations have suddenly collapsed. Instead, many founders simply believe that a larger platform, particularly a private equity-backed MSP platform, is better positioned to figure out the AI strategy than they are. Rather than spending the next five years trying to determine where AI fits into their organization, they would prefer to partner with a larger group that already has the resources, leadership, and capital to tackle that challenge.
This brings me to one of the biggest misconceptions I am hearing from MSP owners today.
Will the Value of My MSP Be Lower if I Don’t Have a Formal AI Practice?
Many founders believe that if they do not have a formal AI practice, buyers will reduce their valuation.
At least for now, that simply has not been my experience.
I have never seen a buyer reduce a multiple because an MSP lacked an AI practice. In fact, most buyers continue to focus on the same factors that have always driven value. They want to see strong recurring revenue, healthy margins, low customer concentration, low customer churn, a stable workforce, and consistent growth. Those fundamentals still matter far more than whether an MSP has launched a dedicated AI service offering.
That doesn’t mean buyers are ignoring AI. During buyer meetings and due diligence, AI is certainly becoming part of the conversation. Buyers want to understand whether management is paying attention to the technology, whether employees are using AI tools internally, and whether the company has started thinking about how AI may impact its customers. However, I have not seen those discussions translate into lower valuations for otherwise healthy MSPs.
In some cases, buyers actually view a lack of AI capabilities as an opportunity.
If a buyer acquires an MSP that has strong customer relationships but has not yet developed AI-related services, they often see an opportunity to introduce those services after the acquisition. From their perspective, that creates future growth potential rather than a reason to discount the value of the business.
How Are Buyers of MSPs Implementing AI?
What I find particularly interesting is that many of the concerns founders have about AI are not necessarily aligned with what buyers are focused on. Founders often worry that AI will replace lower-level engineers, reduce service requirements, or force them to dramatically change how they deliver support. They worry about making the wrong investment, choosing the wrong technology, or simply falling behind. For many owners, especially those approaching retirement, the thought of navigating another major industry shift is exhausting.
Meanwhile, buyers are generally looking at AI through a different lens. Rather than focusing on replacing people, many are looking for ways to improve operational efficiency. For example, I am seeing some larger MSP platforms use AI to help integrate systems across acquired companies. Historically, if one MSP used Halo and another used ConnectWise, integrating those environments could be a lengthy and disruptive process. Today, AI is creating new ways to connect systems and automate workflows without forcing every acquired company onto a single platform immediately.
I am also seeing AI used to connect RMM systems with accounting platforms, automate data movement between applications, and improve operational visibility across multiple portfolio companies. These are practical applications that can create efficiencies and economies of scale, but they are very different from the headlines suggesting AI is about to eliminate entire departments.
Will AI Eventually Impact Valuations?
I believe the answer is yes, but probably not in the way many founders think.
I do not believe that well-run MSPs will suddenly become less valuable because they have not fully embraced AI. However, I do believe that MSPs that successfully leverage AI to improve margins, automate routine tasks, increase productivity, or create new revenue streams could become more valuable over time. Buyers ultimately pay for future cash flow. If AI enables a business to generate more profit with the same level of revenue, that additional profitability will likely be reflected in valuation.
The distinction is important. Today, I am not seeing businesses penalized for lacking AI. In the future, I can absolutely see businesses rewarded for using AI effectively.
My POV as a Technology M&A Advisor
For owners who are not planning to sell anytime soon, my advice is simple: don’t ignore AI, but don’t panic either.
You do not need to completely reinvent your company overnight. What you should be doing is learning how AI can improve your operations, training employees to understand the technology, and ensuring your team can answer questions customers are increasingly likely to ask. You should also be paying close attention to the cybersecurity implications of AI, as many clients will need guidance around secure usage, governance, and risk management.
At the end of the day, I believe AI is influencing seller behavior far more than it is influencing valuation. I am seeing founders accelerate their timelines because they do not want to lead another major technology transformation. What I am not seeing is buyers reducing multiples because an MSP has not yet launched an AI practice.
The MSPs receiving premium valuations today are still the ones with recurring revenue, loyal customers, strong financial performance, low customer churn, and a clear growth story. Those fundamentals continue to drive value. While AI will undoubtedly become a larger factor in our industry over time, the market has not yet reached the point where a lack of AI capabilities is negatively impacting valuation.
My point of view is not based on industry headlines or speculation about where AI may eventually take our industry. It has been shaped by dozens of conversations with strategic buyers, private equity-backed MSP platforms, and independent sponsors over the past several months as I bring new MSPs to market, along with the MSP transactions my firm has successfully closed this year. Across those conversations, I continue to hear interest in AI, questions about AI, and curiosity about AI. What I am not hearing is buyers lowering the purchase price because an MSP has not yet developed a formal AI practice.
For now, the bigger risk is not that AI will lower the value of your business. The bigger risk is assuming you can ignore it completely.
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