How MSPs Can Build Toward Sustainable Growth
BizTechReports Executive Vidcast Conversation with Paul Daigle, CEO of Biz Advisory Board
As managed service providers (MSPs) face mounting pressure to deliver enterprise-grade IT and cybersecurity services to small and midsize businesses, questions of scalability, structure, and profitability have become more urgent than ever. In this exclusive Q&A, BizTechReports speaks with Paul Daigle, CEO of Biz Advisory Board, a firm that supports MSPs in navigating growth, mergers, and operational transformation.
Drawing on decades of experience advising providers across the country, Cissel outlines a maturity model that takes MSPs from scrappy start-ups to national powerhouses. He emphasizes the importance of C-level structure, strategic verticalization, and investment in tools that offer visibility into performance and valuation. This conversation explores what separates MSPs that plateau from those that accelerate—and what metrics matter most for firms aiming to transition from $6M to $100M in revenue.
NOTE: The feature below has been organized into the strategic, operational, financial contexts that emerged in the interview.
Here is what he had to say:
STRATEGIC ISSUES
BTR: What is the current state of the MSP market, and what kinds of organizations are thriving today?
Daigle: MSPs are increasingly becoming the IT backbones of SMBs. The most successful providers have reached revenue thresholds of $6M or $12M and are now acquiring smaller MSPs that can’t keep pace with growing client demands or regulatory complexity. These larger MSPs often have defined C-level teams and serve high-demand industries like finance, legal, and government.
BTR: What defines the turning point from regional MSP to national-scale success?
Daigle: Once an MSP specializes deeply in one or two verticals—like CPAs or healthcare—they can replicate their knowledge and methodologies across additional sectors. This is when they stop being generalists and start becoming known as industry-specific problem solvers, which leads to exponential growth.
BTR: What distinguishes MSP leaders who capture market share from those who stagnate?
Daigle: Visionary MSPs bring in a true executive team. It’s about moving from founder-led operations to scalable leadership. The ones who scale are those who replace ego with management training and strategic hiring.
OPERATIONAL IMPLICATIONS
BTR: What does Biz Advisory Board do to help MSPs mature operationally?
Daigle: We provide customized consulting and a proprietary benchmarking tool. This tool evaluates companies across 72 key performance indicators, offering peer group comparisons, strategic roadmaps, and a blueprint for allocating budget across seven core business functions—marketing, sales, training, legal, accounting, recruiting, and coaching.
BTR: What operational benchmarks separate mid-tier MSPs from industry leaders?
Daigle: At the $6M level, MSPs typically have around 26 employees and begin adopting formal organizational structures. Those who succeed at this stage focus resources on systems, service delivery, and leadership development, preparing them to expand quickly into new markets and geographies.
BTR: What are the biggest operational blind spots among MSPs trying to scale?
Daigle: Many MSP founders come from technical backgrounds and haven’t been trained in organizational management. They focus on serving customers but don’t invest in understanding their own businesses. That lack of introspection often prevents them from making the right hires or scaling systems effectively.
FINANCIAL CONSIDERATIONS
BTR: How does your team assess the financial health or acquisition potential of an MSP?
Daigle: We look beyond EBITDA. MSPs are recurring-revenue businesses, so our analysis includes revenue stability, margins, and service composition. We also calculate cost-per-employee and project revenue per head—key metrics for tracking scale.
BTR: What kinds of margins are well-run MSPs achieving?
Daigle: A well-run $5M MSP can earn $2.5M in profit—a 50% margin. That’s far higher than most industries. As MSPs grow, some reinvest into new technologies and staff, but they typically hold 30–40% margins. Private equity loves these numbers and is aggressively acquiring in this space.
BTR: How does your valuation tool assist with M&A planning?
Daigle: It allows MSPs and buyers to enter four simple parameters—revenue, employee count, tenure, and salary benchmarks—and then identifies ideal acquisition targets that fill organizational gaps. This helps large MSPs avoid overpaying and ensures they buy strategically aligned firms.
TECHNOLOGICAL IMPLEMENTATION
BTR: How are MSPs currently adopting AI, and what separates superficial from strategic implementation?
Daigle: The most successful AI deployments go beyond helpdesk plugins. Advanced MSPs use AI to ingest thousands of data points from security dashboards and summarize them into actionable insights. The AI doesn’t just monitor—it self-heals known issues and flags only the exceptions needing technician attention.
BTR: Is this AI more often used internally or delivered to clients?
Daigle: About 80% of AI utilization is client-facing. MSPs use it to anticipate issues across their clients’ environments and deliver value by preventing outages before they occur. It’s about proactive service, not reactive troubleshooting.
BTR: What role does technology play in transitioning an MSP from local player to national powerhouse?
Daigle: Mastery of systems integration and automation is key. Once MSPs standardize processes across industries, they can replicate success at scale. The tech stack enables them to deliver consistent service quality, regardless of client size or complexity.
For a deeper dive into the peer group framework and tailored MSP growth strategies, visit BizAdvisoryBoard.com.
###