MSP Market Report Q1 2026: SaaS Reprices While MSPs Accelerate as AI Fuels Consolidation and Growth

The MSP market is gaining momentum as AI reshapes the technology landscape.

While software valuations are resetting, MSPs are benefiting from rising enterprise complexity across cloud, cybersecurity, data, and AI, reinforcing their role as critical infrastructure in modern IT environments.

Drake Star’s latest MSP Market Report highlights a market defined by consolidation, scale, and strategic positioning.

M&A activity remained strong in Q1 2026, with 120+ transactions driven by both strategic and financial buyers expanding capabilities across high-growth areas. At the same time, the market continues to scale, growing from ~$350 billion in 2025 toward an estimated $850 billion by 2034.

Key Themes

• Sustained M&A Momentum: 100+ M&A deals in Q1, with IT services representing the majority of activity
• Consolidation at Scale: Leading platforms continue to execute multi-deal acquisition strategies
• AI as a Catalyst: Driving complexity, urgency, and increased demand for outsourced expertise
• More Strategic M&A: Shift toward capability-driven, integrated platform building
• Global Expansion: Continued strength in cross-border activity, led by Europe
  
  

Our Perspective

AI is reshaping and bifurcating the market. Software is experiencing valuation dispersion, while services, particularly MSPs, are seeing increased demand and consolidation.

As enterprises outsource complexity, scaled MSP platforms are becoming central to AI adoption, driving both M&A activity and long-term value creation.

Sam Levy, Partner at Drake Star, notes:
"We are already seeing increased activity across the MSP landscape, with a strong pipeline of new processes expected to launch in the coming months as AI continues to drive both strategic urgency and investor interest."

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