Drake Star MSP Market Update Q3 2026: 110 M&A Deals as Strategic Buyers Pay Up for Specialization
MSP deal activity held steady in Q3 2026 with 122 transactions, including 110 M&A deals and 12 private placements. More founder-owned MSPs are coming to market, with buyers paying premiums for specialization, recurring revenue and a clear capability fit.
KEY HIGHLIGHTS:
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- Supply is rising: Deal flow from MSPs with $2-6M EBITDA picked up over the summer. That added supply is likely to put modest pressure on multiples rather than expand them.
- Buy-and-build math holds: Platforms trade at roughly 12-13x and add-ons at 9-10x, and the arbitrage between them continues to fuel consolidation.
- Buyers are getting selective: IT services fell to 86% of deal count from 95% in Q2 as acquirers added communications, software and commercial services capabilities. Europe led with 53% of volume.
- Private capital doubled down: Private placements doubled quarter-over-quarter to 12, led by PE platform investments in MSP Corp., ECI, PLENTICON and OryxAlign.
Sam Levy, Partner at Drake Star, notes: “There’s more supply coming from smaller founders, and more capital chasing the platforms, but buyers are paying for specificity. Generalist MSPs without a clear angle are the ones feeling it.”
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