IT & Software Service Business Valuation Benchmarks

Business owners, prospective buyers, and industry investors rely on a diverse set of financial benchmarks to assess the value of a business. We have compiled data from current BizBuySell listings and sold businesses to provide insight into the business for sale market and important benchmarks for pricing and evaluating IT and software services businesses relative to industry standards.

See also: Software, SaaS, & App Business Valuation Metrics and Financial Benchmarks

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Highlights of IT & Software Service Businesses Sold on BizBuySell

IT and software services businesses listed and sold on BizBuySell include managed information technology service firms or managed service providers (MSPs), cybersecurity firms, digital marketing services, VoIP providers, and related companies. These are mostly B2B companies which tend to be more stable compared to consumer-focused businesses.

IT & Software Service Business Transaction Trends

IT and software services business sales peaked during the 2020 pandemic, as remote work became necessary and drove demand for these supporting businesses. As their revenues spiked, so did their valuations and sale prices. Since then, values have come back down but have remained fairly consistent, trending up through 2025.

IT & Software Services Business Valuation Multiples

Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of sales and income. They represent the sales price of a business relative to its financial performance, and given enough individual business sales data, they represent what the market is willing to pay for a business given its revenue and earnings.

Valuation Trends

Business values and associated multiples fluctuate over time, influenced by a variety of macroeconomic factors such as interest rates, inflation, consumer spending, and overall economic growth. The technology sector also changes rapidly, leading to volatile valuation trends. IT and software services valuations grew on average in 2022 and 2023, counter to the rest of the market, which saw pressure on valuations from increasing interest rates. In 2024, multiples returned to the mean, staying above pre-pandemic levels, though the average revenue multiple rose in 2025 on greatly improved profit margins.

Earnings Multiples

Earnings multiples represent the value of a business relative to its owner’s discretionary earnings or "cash flow". Arguably the most important valuation metric - as seller's discretionary earnings will often dictate how much a buyer is able to borrow to finance the business acquisition - most business valuations will hinge on a reasonable earnings multiple.

Revenue Multiples

Revenue multiples represent the value of a business relative to its overall annual sales or revenue. In conjunction with an earnings analysis, revenue multiples are commonly used to value a business based on its top line sales.

How to Interpret These Multiples

Recent Listings vs. Sold Businesses

We calculate and provide valuation multiples from two sources: Current and recent listings of IT and software services businesses for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are usually higher due to owners setting asking prices above what their businesses might typically sell for. This occurs either intentionally as a negotiation strategy, or incidentally due to business owners’ common tendency to overvalue their own businesses. When current listing multiples are lower, that signifies decreasing values or previously inflated values of sold businesses.

Multiples based on comparable businesses - "comps" in business broker parlance - are much more useful as they represent the prices at which businesses ultimately get sold. Business brokers and valuation professionals will always turn to local comps when pricing businesses for sale or evaluating businesses for acquisition. We provide both sets of data at the national level to offer general context. Local business sale comps by sales class suitable for pricing and negotiations are available in BizBuySell's Business Valuation Report.

Quartiles, Median, and Average

No two businesses are identical, and as such, valuation multiples exist in a range. We have carved out four common values within this range: Lower quartile represents the value under which the lowest 25% of valuation multiples fell. Upper quartile represents the value above which the highest 25% of multiples fell. Median is the middle of the range, and average is the mean of the set. Mean is almost always higher than the median, driven by a minority of high volume, high value businesses sold at multiples above the upper quartile.

Businesses with consistent financial performance, above average revenue and earnings, demonstrable growth potential, low owner involvement, unique competitive advantages, and a seller willing to finance will command a multiple at or above the upper quartile. Smaller businesses with thinner profit margins, full-time owner involvement, and many direct competitors will trade at or below the lower quartile. Most businesses will fall somewhere in the middle.

Based on this data, half of IT and software services businesses are valued between 2.20 and 3.87 times their annual seller discretionary earnings, with 25% of higher-volume, fast-growing businesses trading above this range, and 25% of smaller, less desirable businesses trading below.

IT & Software Service Business Financial Benchmarks

To determine how a business compares in terms of revenue and earnings performance relative to industry peers, it’s necessary to have some insight into industry standards. "Benchmarking" describes the practice of comparing a business’s financial performance to typical industry standards to determine where a business falls relative to other businesses in the same industry. These benchmarks can help guide owners and investors towards appropriate valuation multiples from the range above.

To that end, we have aggregated IT and software service business financial ranges useful for comparing an individual business to the broader industry.

IT & Software Service Business Revenue and Earnings Trends

The trend of revenue and discretionary earnings of IT and software service businesses listed and sold on BizBuySell has been volatile, but generally increasing. Revenue and earnings have settled well above pre-pandemic levels, and in 2024, median revenue increased 20% over the prior year, though profit margins fell. 2025 saw a 37% drop in revenue and, at the same time, a 20% increase in earnings, causing a large swing in average profit margin. 

Earnings Ranges

Discretionary earnings (used interchangeably with the terms "cash flow" and seller's discretionary earnings or SDE) is often the crux of business valuations, so it is important to benchmark it relative to similar businesses traded on the market. Below you will find discretionary earnings ranges for IT and software service businesses sold over the past five years, as well as recent software services business for sale listings.

Revenue Ranges

Sales volume plays a large role in business valuation, as it measures the size of the potential income opportunity for new ownership. It's not uncommon for buyers to select an earnings multiple range based on overall revenue. The table below includes revenue ranges of IT and software service businesses sold over the past five years and recent businesses listed for sale.

How Revenue and Earnings Level Affects Business Values

Clearly higher levels of earnings lead to higher valuations, even given the same multiple. However, valuation multiples also tend to rise with business sales volume. Popular software services companies that generate higher sales (and maintain tech level profit margins) tend to sell for earnings multiples on the higher end. So, an MSP business with sales of $2MM may sell for an earnings multiple approaching 4, where a lower volume IT business with sales below $400k may trade closer to 2 times its annual seller's discretionary earnings.

This tendency for higher sales volumes to fetch higher valuation multiples is largely driven by the economics of business acquisition financing. Higher volume businesses give buyers more cushion to cover debt service obligations and still have enough left over to pay the new owner a reasonable return on the acquisition cost.

Technology Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader technology sector when benchmarking information technology and software service businesses. The chart and table below include key metrics from sales of technology businesses on BizBuySell between 2021 and 2025.

Compared to other types of businesses in the technology sector, IT and software services companies tend to be slightly discounted relative to their earning potential. The characteristic that makes these types of businesses slightly less appealing than other technology businesses is the ongoing service component. These businesses cost more to scale versus pure platform or software as a service models. That said, managed service providers tend to have consistent profits with less volatility than other types of tech businesses, and so often sell successfully at very reasonable valuations.

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