How the Race to Become AI-First Is Reshaping MSP M&A, Service Delivery, and What It Means for Owners Deciding Whether to Sell
Something has shifted in managed services. The change is not subtle, and it is not coming. It is already here, written clearly in the press releases, acquisition announcements, and investor presentations of the industry’s most aggressive consolidators. The MSP of 2026 does not look like the MSP of 2020. And the MSP of 2030, if the major platform builders have their way, will not look like the MSP of today.
The driving force is artificial intelligence, specifically the emergence of agentic AI systems capable of handling not just routine ticket triage but complex, multi-step IT service workflows with minimal human intervention. For the platforms currently buying up regional MSPs at record pace, this is not a technological trend to monitor from a distance. It is the central thesis of their investment strategy, and it is fundamentally changing what acquirers are looking for, what they are paying, and what they plan to do with the businesses they buy. For thousands of independent MSP owners, there are few things that matter more than what they decide to do next.
The Consolidation Wave, by the Numbers
The market for managed services is worth about $350 billion, and it’s expected to keep growing at a rate of 10.4% every year until 2033. There are billions that private equity firms have ready to invest in technology services, and we can see that money being used. There were 466 total MSP transactions in 2025, up roughly 20% year over year from 389 in 2024, with $4.3 billion in disclosed deal value. All top 10 strategic consolidators each made at least five MSP acquisitions over the past two years.
The year 2025 was a remarkable one in terms of M&A for Evergreen, operating under its Lyra Technology Group brand. The company acquired 33 MSPs, and described Q4 of 2025 as one of the busiest for mergers and acquisitions in its history. In June, Evergreen achieved a notable milestone by adding its 100th MSP portfolio company. Meanwhile, Thrive, backed by Court Square Capital Partners and Berkshire Partners, is approaching $400 million and has set an ambitious target of becoming the first next-generation MSP to reach $1 billion in revenue. New Charter Technologies, a portfolio company of Oval Partners, has been expanding aggressively in the Midwest and Northeast. However, the move that most clearly signals where New Charter thinks the industry is heading was the acquisition of Orchestrate AI Labs.
The Acquisition That Changed the Conversation
In February 2025, New Charter Technologies acquired Orchestrate AI Labs, a company that had been working quietly on figuring out how to use the latest AI models to help managed service providers do their jobs better. The CEO of Orchestrate AI, Ryan Barton, became the Chief Innovation Officer at New Charter. His new job is to lead the way in changing how IT departments work, using new technology and new ideas.
Barton’s framing of the acquisition went well beyond marketing language. He argued that AI is not an incremental improvement but a structural rupture, one that invalidates long-standing assumptions about how IT departments are organized, staffed, and priced. New Charter CEO Peter Melby put it plainly: “We are focused on building the MSP of the future—one where AI supports and enhances our people and our clients.” He is also on record as saying: “We can’t outsource vision. Owning the future means building it ourselves, not waiting for someone to package it and sell it back to us.”
This deal is significant because of what it says about the approach of top MSP acquirers. New Charter didn’t just purchase a software tool or sign a contract with a vendor. Instead, it brought in a team that’s expert in AI to work internally on creating a new model for delivering services, one that doesn’t fully exist yet, but that everyone at the top of the market believes is imminent.
What AI-First Actually Means for Service Delivery
The phrase “AI-first” has proliferated rapidly enough to risk losing meaning. But in the MSP context, it corresponds to specific, measurable changes in how services are delivered, and those changes have significant implications for cost structure, staffing ratios, and margins.
The old way of doing things with MSP service desks is very manual. Technicians have to deal with every single ticket that comes in, from start to finish, taking in the ticket, figuring out what’s going on, sending it to the right person, diagnosing the problem, and fixing it. Most of the costs, around 60%, come from the people doing the work. Every ticket needs a human to look at it, even if it’s something simple like resetting a password, fixing Wi-Fi, or getting someone set up with a new system.
Agentic AI changes this calculus materially. Unlike earlier automation tools, which required rigid workflow definition and extensive maintenance, agentic AI systems can observe context, reason through problems, and execute multi-step resolutions without predefined scripts. Current market figures from zofiQ (recently acquired by ConnectWise) suggest AI can handle up to 80% of routine queries and 70% of repetitive tasks, reducing average issue resolution time by 40% and service desk response times by as much as 65%. Thread claims to resolve 10% to 25% of issues with zero technician involvement while creating fully prepped tickets for the remainder, and to improve technician efficiency by 35% on the balance.
For MSPs with hundreds of endpoints per technician, the math is significant. Evergreen noted an example from its own portfolio where AI automated a key process so effectively that the resulting cost savings exceeded the client’s previous total bill for the manually delivered service.
Thrive is taking a big step forward by introducing its Managed AI services, along with a new Compliance Center and Network Detection and Response offerings. Ntiva, which is backed by PSP Partners, lists managed IT, cybersecurity, strategic consulting, cloud solutions, and AI services as its main areas of focus, and ranked 11th in the Channel Futures MSP 501 in 2025. The company’s acquisition of Contuit in October 2024 brought in advanced API automation tools and software developers, expanding its digital transformation and automation capabilities.
In the regulated verticals, AI and compliance are becoming inseparable. In July 2025, FFL Partners orchestrated the merger of Abacus Group, a financial services-focused MSP, with Medicus IT, a healthcare-focused MSP, to create what it described as a compliance-centric, market-leading MSP platform for two of the most heavily regulated industries in the economy. The combined entity cited expanded capacity to innovate in AI and cybersecurity as a primary strategic rationale.
What Acquirers Are Paying, and Why It Varies So Much
In today’s environment, not all managed service providers are seen as equal. There’s a big difference between a basic, no-frills MSP and a high-end one. This gap has grown a lot, and now having artificial intelligence capabilities, or at least being ready for AI, plays a big role in which category a business falls into.
Median EV/EBITDA multiples for MSP transactions in 2025 clustered around 8.9x across a sample of 120 disclosed transactions. But that median obscures an enormous range and had a median transaction size of $38.5 million. Large platforms with $5 million or more in EBITDA, strong organic growth, and scalable operations have achieved multiples in the teens or higher. Smaller MSPs with under a few million in revenue typically see multiples around 4x to 5x.
The factors that drive premium valuations are no longer simply size and recurring revenue, though both remain essential. Buyers now reward operational efficiency, documented processes, vertical specialization, and credible positioning in high-growth service categories including cybersecurity, cloud, and increasingly AI. Specialization in growth segments can increase multiples by 1 to 2x. High automation and standardized processes add 0.5 to 1.5x. EBITDA margins above 20% typically yield another 1x to 2x premium. Conversely, heavy hardware dependency, project-heavy revenue with low predictability, and low service standardization each suppress multiples. Undifferentiated MSPs are seeing slightly declining multiples as buyers become more selective.
The strategic implication is clear: acquirers are paying a premium for the specific operational and service-delivery characteristics that make AI integration faster and more impactful. A business with clean processes, high recurring revenue, documented knowledge bases, and a client base in a defined vertical is exactly the kind of business into which an AI-first platform can most quickly inject the tools and methods being built by teams like Orchestrate AI. It is also the kind of business that retains client relationships post-acquisition, which, at the end of the day, is the primary asset being purchased.
What This Means for Individual MSP Owners
The implications for independent MSP owners fall into three broad categories: valuation and timing, operational positioning, and what happens after a sale.
On valuation and timing, the current environment is a seller’s market for the right businesses, but that window may not remain equally favorable as the market bifurcates. Premium valuations are being paid for MSPs with strong recurring revenue, documented processes, vertical specialization, and EBITDA margins that reflect operational discipline. Businesses without these characteristics are increasingly struggling to attract interest or maintain valuations. The spread between the best and worst-positioned MSPs has widened, and it is likely to continue widening as AI capability becomes a more explicit factor in acquisition diligence.
Business owners who have created solid, reputable companies in stable industries, and have invested in streamlining their operations and keeping detailed records, are now in a great position to make some big decisions. There are many potential buyers out there with deep pockets, and they’re all competing with each other to acquire top-notch businesses. It’s not uncommon for several buyers to be interested in the same company at the same time.
AI readiness is now a valuation signal. Operational efficiency, standardized service delivery, and scalable workflows reduce risk and increase buyer confidence. Two MSPs with identical revenue can command very different multiples because buyers evaluate operational maturity and risk reduction alongside financial performance.
For business owners who haven’t gotten around to making these changes, it’s a tough decision. Keeping up with operational improvements can make a big difference when it’s time to sell. But with artificial intelligence changing everything so fast, the gap between companies that are using AI and those that are not is getting bigger and bigger. And it’s not just acquirers driving that; clients will start to notice the difference too. They’ll see that some providers can respond faster, solve problems before they happen, and save them money, and they’ll want that for themselves.
The Question Every MSP Owner Should Be Asking
The honest question for any MSP owner to ask is not simply whether to sell, but whether their current trajectory puts them on the right side of the inflection the major platforms are accelerating. The MSP industry has always rewarded operational excellence, recurring revenue, and client relationships. Those things have not changed. What has changed is the technical foundation underneath them.
A business that can handle 70% of its service tickets without a technician reshapes every cost and pricing assumption. It changes what clients expect. It changes what a reasonable price for a managed services contract looks like. And it changes what it means to compete as an independent provider against platforms that have already invested heavily in building or acquiring that capability.
Platforms see it as a chance to gain, and for them, it really is. But for owners who are on their own, things are not so simple. They have a real chance to sell their business for a high price to a buyer who has a lot of money and a clear plan. At the same time, they also risk waiting too long, until the competitive environment has shifted enough to make the business less attractive.
What we can learn from the actions of companies like Evergreen, Thrive, New Charter, Ntiva, and Medicus IT, as well as other private equity-backed consolidators, is that those with the most resources and knowledge have already placed their bets. They are convinced that the future of managed services will be shaped by the use of artificial intelligence to deliver services on a large scale, and that this will be made possible by platforms that are big enough to justify significant investments in building these capabilities. The biggest players in the room have already shown their cards. The only question left is what individual MSP owners are going to do with theirs.
