If you’ve spent any time scrolling BizBuySell lately, you’ve probably noticed the same thing I did. IT companies of every size are listed across the country with all kinds of price tags, promising “recurring revenue,” “cloud-based systems,” or “AI potential.” Some of those listings close for eye-catching prices, but most sell for something far more realistic.
To see what’s really happening, I analyzed hundreds of closed IT and software business transactions listed on BizBuySell. The results tell a story that every owner and buyer should hear.
Nearly two out of every three IT businesses sold for 2 to 3 times annual cash flow. That is the real heartbeat of the market. High-value SaaS companies and large managed service providers occasionally reach 5x or more, but those are the exception. The reality is that most IT businesses are bought and sold at practical, cash-flow-driven multiples.
The typical IT business in the data set earns around $2 million in revenue and produces roughly $470,000 in annual cash flow. The overall average multiple hovers near 4x, but the majority of deals fall below that.
| Business Type | Avg. Multiple | Profile |
|---|---|---|
| Enterprise SaaS & IT Firms (>$10M) | 6.8x | Recurring revenue, scalable, PE targets |
| Mid-Market MSPs ($1–10M) | 5.4x | Regional managed service firms |
| Small IT Firms ($500K–$2M) | 4.3x | Local IT support, MSP light |
| Main Street IT (<$500K) | 1.6x | Owner-operated, little scalability |
The 2 to 3x range is not a weakness. It is a reflection of how most IT businesses operate. Buyers and lenders both price for sustainability and risk, not hype.
Common factors that keep valuations in this range include:
Customer concentration or churn risk
Heavy owner involvement
Project-based work instead of recurring contracts
Lender requirements for short repayment timelines
For buyers, these deals can be strong investments that pay for themselves within a few years. For sellers, the numbers highlight why recurring revenue, documented systems, and client diversification matter so much before going to market.
Private equity groups remain active, especially in managed service rollups. Corporate buyers pursue niche SaaS tools and AI-driven platforms. Individual buyers, often exiting corporate jobs, are entering the market for smaller, profitable IT firms that can be operated or expanded quickly.
If you’re looking for a hotbed of IT transactions, start with:
California – SaaS and cybersecurity powerhouses
Texas – Data, VoIP, and managed services hubs
Florida – Fast-growing SaaS and cloud infrastructure deals
North Carolina – Strong MSP market with loyal regional clients
Together, these four states accounted for over half of all IT business sales nationwide.
If you own an IT company and want to sell above the 3x range, you’ll need to show buyers that your business runs without you, retains customers automatically, and grows predictably. The best performers in this market share several traits:
Recurring revenue from contracts with renewal terms
Documented processes that allow delegation
Diverse client base with no single client over 10 percent of revenue
Clean, current financials
Scalable systems and a clear growth plan
These are the companies that consistently sell at 4x, 5x, or higher.
At EDGE Business Advisors, we help owners maximize value before they sell—and help buyers find deals that actually make sense.
Because whether you’re selling or buying, the smartest play is understanding what the market actually pays for IT businesses, not what the headlines say.
Schedule a confidential consultation at buyselledge.com or call 404-940-5748.
Article Sources: Source: BizBuySell.com Database